Milei’s Latest Economic Gamble: Returning Millions of Undeclared Dollars to the Regular Economy
Javier Milei is embarking on a new plan aimed at luring an estimated $271bn of savings held by Argentinians in undeclared cash, back into the formal economy (Madry, 2025). The policy could provide yet another stimulus for the economy, at least in the short term, but raises some financial governance and credibility concerns.
Background: cash stuffed under mattresses
Argentines keeping their US dollar savings at home, in safe deposit boxes or offshore accounts instead of in banks, is not a recent issue (Nugent, 2025). In fact, it is a deep-rooted trend, caused by citizens’ mistrust in the domestic economy, the government and the peso, after decades of economic failures. Chronic inflation, for example, which peaked last year at 289%, together with past episodes of deposit confiscation and strict capital controls have almost forced Argentines to believe their savings are better off stuffed under their mattresses (Nugent, 2025).
So entrenched are these practices, that official estimates indicate that, in total, Argentine households and businesses have over $270 bn in cash outside the system (Madry, 2025).
Rationale
This situation has contributed to the expansion of the informal economy, in which currently around 50% of the work force are employed (Nugent, 2025).
Furthermore, large payments for cars, houses and appliances being conducted in cash are not uncommon in Argentina (Debre, 2025). This is because in the formal market, these purchases require extensive bureaucratic processes and regulatory scrutiny that risk not matching declared income and consequent fines, taxes and even criminal charges.
Regularizing at least a few billions of those dollars could boost public consumption and a general dynamism and stimulus for the economy, without having to print pesos, like previous governments have been known to do.
New policy framework
Part of the policy includes relaxing Argentina’s tax evasion curbs to lure these hidden dollars back into the regular economy. Key to this, is allowing citizens to use these cash dollars in their daily transactions, without the need of declaring their origin (Madry, 2025). Rules for property buyers and public notaries will also be relaxed.
This strategic relaxation of reporting requirements is intended to boost the amount of US dollars in circulation and to facilitate the transition towards a system where dollars replace pesos (Debre, 2025).
Even the announcement of the policy was strategic, because, as Milei knows all too well, rhetoric and delivery are everything. With his usual spin, he publicly declared that all those Argentines who hid their money under mattresses throughout the decades are “heroes”, seeing as they escaped predatory fiscal policy and systemic corruption (Nugent, 2025). He even went as far as saying that disclosing their money would be significantly less risky now, with these reforms, and would constitute a patriotic act that would help revive the national economy.
Critiques
Critics have argued that, more than pragmatic, the measure is careless. The rationale behind it is logical, but the policy has too hastily overlooked the risk of legitimizing tax evasion and money laundering. Indeed, many economists question how Milei’s government intends to differentiate legally earned hidden dollars with those from illicit activities (Nugent, 2025). This is a concern of particular importance in the country, given that in the past two decades, Argentina has offered a total of 12 tax amnesties, averaging one every four years (Madry, 2025).
Furthermore, the policy must also be accompanied with more structural reforms — which Milei could struggle to pass before the midterm elections in October (Nugent, 2025).
In conclusion, Milei’s most recently announced policy is strategic and yet another gamble to continue to boost the economy as he has successfully done in the past year and a half. However, the success of this policy, unlike others, depends on citizens’ trust, not on economic forces as other measures have. While a bold and pragmatic approach, rebuilding Argentines’ institutional trust is not a short-term endeavour (Nugent, 2025). Despite his economic accomplishments so far, many Argentines still have not felt his successes and therefore remain sceptical. Most probably, they will continue to prefer their mattresses over banks.
References:
Debre, I. (2025, May 22). Argentina’s Milei unveils bold plan to lure billions in undeclared dollars back home. AP. Retrieved from https://apnews.com/article/argentina-dollars-milei-us-economic-crisis-imf-tax-authority-fbe36a2ef7d716fde56096f4d1445715
Madry, K. (2025, May 22). Argentina aims to unleash some $271 billion stashed away in mattresses, safes. Reuters. Retrieved from https://www.reuters.com/world/americas/argentina-clears-roadblocks-use-stashed-away-dollars-2025-05-22/?utm_source=chatgpt.com
Nugent, C. (2025, May 19). Javier Milei’s plan to free $270bn cash stuffed under Argentine mattresses. Financial Times. Retrieved from https://www.ft.com/content/a8b3c85b-6275-44d8-97ca-18131d38b42f
Written by Laura Rebollo
