Uruguay's economy on alert for the 'exodus' of buyers to Argentina

The "maddening" exodus to an Argentina with super cheap prices as a result of inflation puts in check the west coast of Uruguay, where the government's measures to alleviate capital flight and high unemployment are seen as "totally insufficient".

With postcards such as the one from the weekend before May 1, when lines of vehicles to Argentina of up to two and a half kilometers were formed on the three bridges that connect the nations of the Río de la Plata and a measurement that throws for one of the steps a price difference of 144%, alerts are on in Uruguay.

Present since before the borders closed as a result of the pandemic were reopened in 2021, the exchange rate difference between Uruguay and Argentina is not a new problem for the Uruguayan departments (provinces) of Artigas, Paysandú, Salto, Río Negro, Soriano and Colonia.

It is that, as described in dialogue with EFE the mayor of Paysandú, Nicolás Olivera, in cities such as the capital of his department, connected by bridge with the Argentine Colón, crossing is "very easy" and can take 10 minutes.

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The president of Uruguay, Luis Lacalle Pou. AFP Photo

No solution

However, the escalation of inflation in Argentina, which in its last measurement reached 108.8% annually, has exacerbated concern about a disparity that Uruguayan Labor and Social Security Minister Pablo Mieres has described as "impossible to solve."

"Everything is cheaper, so people as it is so close cross and many cross for everything: for lunch, for dinner, to have a good wine, to use professional dental or ophthalmology services. Pharmacies are very cheap, opticians, beauty services, hairdressers, everything, "says Olivera.

From the border with Concordia (Argentina) Salto, the tourist entrepreneur Marcelo Faccini remarks that "many sources of work" have been lost and that, with trips to the Argentine side that are already even to stay and live there -from Salto sources estimate that 2000 people have already done it-, "everything has gone haywire".

"They rent houses there because life is cheaper, a rent of a more or less good house is in the axis of 50 or 60,000 Argentine pesos (about 250 dollars) at this time (...); Here with that money you do not rent anything, so it is a desbande (party) and an impressive currency shoot, "he emphasizes.

Insufficient measures

On May 10, the Government announced a battery of measures to alleviate the crisis on the coast that included increasing gasoline to bring its price closer to that of Argentina and restoring exemptions arranged in 2021 for businesses.

The measures, which also include discounts in pharmacies and a subsidy that encourages hiring, are "late" and "totally insufficient" for the secretary general of the Municipality of Salto -of the opposition Broad Front-, Gustavo Chiriff.

The Buquebus terminal in Buenos Aures.

"I think the government should have another look, especially towards border prices, which is where we are aiming. So far it has not messed with what we understand to be the knot of all this, which are the importers, "he alleges, to which he emphasizes that it is missing, for example, to authorize micro imports for basic products.

Prepared by the Economic Observatory of the Catholic University of Uruguay, the Border Price Indicator showed that in May the price difference between Salto and Concordia climbed to 143.6% and that food and non-alcoholic beverages are 159% more expensive in that Uruguayan city.

To which Faccini stresses that from the Executive "they do not see all the reality" and that "nothing has been done" for a sector especially hit as tourism, Chiriff points out that the three departments with bridges to Argentina have the highest unemployment rates in the country and, among them, Salto has the highest, with 14.7.

To the press, Minister Mieres clarifies that Salto "has historically had a higher unemployment rate" and explains that it responds "as far as possible," because the Argentine economy has "a very general imbalance."

Olivera, meanwhile, says that Paysandú seeks to compensate for losses by attracting tourism through "parties, congresses or sporting events."

Zero kilo and freedom

Asked about the situation, Uruguayan President Luis Lacalle Pou recently told the media that it is ruled out to impose "zero kilo" on the border for the entry of purchases because it is reasonable for those who feed their family to make the assortment "where they get the money."

To what governs a maximum of five kilos per person every 15 days, Olivera agrees with the president that taking it to zero impacts "much more" on those who buy just enough out of necessity than on those who are comfortable and travel to spend, which is what, according to Lacalle Pou, seeks to "discourage."

"We definitely do not aim for zero kilo but for the control of large contraband," says the president of the Confederation of Business Chambers (CCE), Diego O'Neill, for whom it is key to review "the regulations on importers" that make products more expensive.

On the other hand, questioned about whether the option of restricting circulation is on the table, both Chiriff and Olivera – of the ruling National Party – say no.

"It always occurs to someone to say 'we are going to ban good vehicles from being able to...' But no, (we must) respect freedom," rounds the latter.

EFE Agency

PB

See also

"Water emergency": Uruguay is experiencing the worst drought crisis in decades

A severe drought causes lack of water in Uruguay: "How salty is mate"