BUENOS AIRES, July 18: Argentine authorities are going ahead with their policy of tightening currency controls to stem capital flight and protect foreign exchange reserves in order to repay its debt, despite criticism from business circles.

Argentina's reserves shrank nearly $6 billion to $46.6 billion in a matter of months, prompting President Cristina Kirchner's government to enforce tight controls on the currency market by limiting dollar purchases.

All major transactions as well as savings are in dollars in Argentina.

These measures have put a damper on real estate transactions and construction, two key sectors of the economy, and this deepens the path to recession, said Mariano Lamothe, of the private consulting firm acebeb.com.

Authorities have banned real estate transactions in dollars as well as acquisition of dollars for saving purposes. Earlier dollar purchases for foreign travel were also tightly controlled.

South America's second largest economy after Brazil must meet two key payments this year: a $2.4 billion Boden bond payment in August, and $3 billion in December to the holders of GDP warrants.

The nation must still repay $6.5bn to its public creditors from the Paris Club.—AFP