Argentina launches effort to formalize black market

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By CGTN’s Joel Richards

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.

During a series of raids last month, Argentine police detained La Salada head Jorge Castillo, who didn’t go quietly, but instead fired 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.

CGTN interview of Castillo in 2014 /CGTN Photo

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 US dollars.

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

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

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

CGTN Photo

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

Authorities have been clamping down on street sellers, like in the neighborhood in Buenos Aires where streets 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.