Argentina launches effort to formalize black market

Global Business

In Argentina, years of an underperforming economy led to unregulated markets for currency and all sorts of goods. Now, authorities are determined to regulate the black market known as La Salada.

CGTN’s Joel Richards reports.

During a series of raids last month, Argentina police detained La Salada head Jorge Castillo. He didn’t go quietly, firing at officers while resisting arrest. Castillo is currently in jail, accused of extorting and exploiting stall owners at his vast informal market, which he’d been running for nearly two decades.

Back in 2014, when CGTN interviewed Castillo, he was proud of having built a market in which small family businesses could set up and profit.

Castillo told CGTN there were over 30,000 stalls at La Salada. Most sold textiles, but the market was expanding into new sectors and products. Buyers would travel from across Argentina and neighboring countries to buy here. The daily turnover, he said, was in the millions of dollars.

The peso has devalued greatly since 2014, but at today’s rate the amount Castillo quotes is more than $15 million.

The Confederation of Small Businesses welcomed the June raids on the market which they say symbolizes the informal economy in Argentina.

“We are very satisfied by what the government has done,” Pedro Cascales, Argentina Confederation of Small Businesses said. We are making claims about this illegal street market for over 15 years. It a very important point, we small businessmen need to formalize the economy.”

According to the confederation, informal and unregulated trade totals over $5 billion annually and that means the state is losing over $1 billion a year in lost taxes.

Authorities have been clamping down on street sellers, like in this neighborhood in Buenos Aires where streets here were once lined with stalls. Those stalls have now been relocated to a large warehouse nearby.

But at that warehouse, traders complain there are few customers and they are unable to make enough money. They want to return to their position on the street.

Incorporating informal sectors into the formal tax paying economy is a priority for the government. But size brings power and the enormity of La Salada-style markets, and their success – may prove difficult to reform.