(Bloomberg) -- Argentina attracted almost six times more than it expected from an amnesty on unregistered funds held abroad, boosting fiscal revenue that might help it meet the budget deficit target for a second consecutive year.
The $116.8 billion total surpassed government estimates of $20 billion and raised 146.8 billion pesos ($9.5 billion) in fiscal revenue, tax agency head Alberto Abad told a press conference in Buenos Aires. Participants in the amnesty paid a 10 percent fine if they declared their funds before Dec. 31 and 15 percent after that. They were also given the option to invest in three-year government bonds paying zero interest or seven-year bonds paying a 1 percent coupon.
President Mauricio Macri announced the amnesty in May to help capture a fraction of as much as $500 billion in funds believed to be stashed abroad. Most of the revenue is earmarked to pay pensioners 47 billion pesos ($3.1 billion) they were awarded in legal sentences after suing the government. The government needs to raise an additional 75 billion pesos a year after raising pensions.
Argentina beat its 2016 fiscal deficit target as revenue from the tax amnesty bolstered government coffers. The 106 billion pesos in extra revenue it received in the final quarter limited the primary deficit to 4.6 percent of gross domestic product, compared with the 4.8 percent target. The government is targeting a shortfall of 4.2 percent of GDP for this year.
Several banks including Itau Unibanco Holding SA, UBS Group AG, Julius Baer Group Ltd. and Grupo BTG Pactual are weighing opening wealth-management businesses in Argentina to capitalize on the money flowing back into the country. The government expects the financial system to grow 10 percent following inflows from the program.
To contact the reporter on this story: Charlie Devereux in Buenos Aires at cdevereux3@bloomberg.net.
To contact the editors responsible for this story: Vivianne Rodrigues at vrodrigues3@bloomberg.net, Philip Sanders
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