Argentines rediscover the pleasure of traveling abroad

In the Argentine film Plata dulce , released in July 1982, a month after the end of the Falklands War, a family returns from a short trip to Miami laden with televisions, VCRs, and audio equipment. The protagonist, Carlos Bonifatti ( Federico Luppi ), doesn't hide his enthusiasm for the economic boom that Argentina was experiencing under the dictatorship. "Now with the cheap dollar, traveling is a phenomenon. Do you know what they expect there? We won't ask anyone for money anymore; we, the Argentinians, are the ones who provide the dollars," he says with a big smile, while pushing a cart loaded with boxes at Ezeiza Airport.

Those were the days of "give me two," the expression that summed up the voracious buying spree of Argentines who took advantage of the fact that the United States and Europe were "dirt cheap" compared to Buenos Aires. The dream was short-lived because, to summarize, it wasn't true that the country didn't ask anyone for money, as Bonifatti said. The external debt rose from $9.7 billion in 1976, the year of the military coup, to $45 billion in 1983, when democracy returned. External debt was the only way the military government found to offset the drain on the Central Bank's reserves. The celebration of world travel and the cheap dollar ended with 300% inflation and a cycle of recurring crises that has lasted 40 years.

Sweet money has become a topic of conversation again. The dollar is "cheap" again, the Central Bank's reserves are below zero, and the IMF has just approved a $20 billion loan . And just as it did 40 years ago, and also in the 1990s under the ultra-liberal model of Peronist Carlos Menem, Argentines are dressing up as tourists and heading out into the world. Those who can afford it, of course, are apparently many. According to data from INDEC, the official statistics office, during the first half of the year, foreign tourism cost Argentina $3.786 billion. Since the foreigners who visited the country left considerably less, about $1.5 billion, the tourism balance between January and June was negative by $2.268 billion.

This is a huge figure for Argentina and for Milei's economic model, which uses an exchange rate with an overvalued peso against the dollar as its main strategy to contain inflation. Since this has worked so far—the CPI fell from 25% monthly in December 2023 to less than 2% last June—no change is in sight. The government denies that it is facing a problem, arguing that there is no fiscal deficit now, as in the past. The last experiment with a currency anchor against inflation was under Mauricio Macri, starting in 2015, and it ended in disaster. In the 1990s, Menem was more radical: he pegged the peso at one-to-one parity with the dollar, and everything blew up when the inflow of dollars from loans and privatization stopped. It all ended in 2001, with the famous corralito crisis.

Echoes of the past

Milei calls economists who warn that the cheap dollar, sooner or later, becomes a problem, at best, "econochantas." Today, a cup of coffee in Buenos Aires can cost up to four dollars, a figure unmatched by any other Latin American country. This drives away local tourists, who spend less on vacations in Brazil or the United States than in Mar del Plata, the great middle-class Buenos Aires resort. During the second quarter of this year, foreign tourism grew 46.2% year-on-year, also according to INDEC.

The average hides the stampede of Argentines leaving the country for just a couple of days to go shopping. The preferred destination is Chile. Traffic through the Cristo Redentor Pass, which crosses the Andes mountain range near Mendoza, doubled between April and June compared to 2023. Meanwhile, the number of Chileans crossing into Argentina grew by only 24%. Many Argentines feel like they're watching a rerun of a movie, and these days they're reminded of "Dulce Plata." Needless to say, that story ended very badly.

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