Argentina: new project seeks to boost its economy

One of Alberto Fernández's first measures in the presidency is a package of laws that includes taxes to try to get out of the economic crisis that the country is facing.

Alberto Fernández, President-elect of Argentina

Alberto Fernández, President-elect of Argentina. / Photo: AP

LatinAmerican Post | Juliana Suárez

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Leer en español: Argentina: nuevo proyecto busca impulsar su economía

The measures arise as an immediate response from the new Argentine government to what he called "economic emergency." According to the statement of the Ministry of Economy, these "point to the economy stop falling and begin to correct their imbalances to generate greater social equity and solidarity with those who have suffered the most."

The package, called before Congress as the Law of Solidarity and Productive Reactivation, aims to activate an economy that has been in recession in recent years and whose fiscal deficit has impeded its development and seeks to reallocate resources. “We cannot allow the deficit to grow because we have no way to finance it; if we resorted to monetary issuance to finance it, it would be destabilizing. We are not reckless but we come to bring responsibility and reassure the Argentine economy,” said Economy Minister, Martín Guzmán, who publicly presented the project at a press conference.

Guzmán explained that the project has four central axes: “retirement, taxes, fees, and debt”. Under this framework, the project will impose taxes on agriculture, the purchase of dollars and some companies. This, although it may seem unpopular to the naked eye, is the government's option in the face of a crisis that continues to increase. The measures seek to favor the medium and long term companies, so they are being taxed at this time.

Read also: Latin America lives its worst economic moment in 70 years

For this reason, President Fernández said in a radio interview: “I ask you not to fire, but, in turn, we give you advantages to grow, that also means moratoriums for the tax and social security debts you have, we give you help to stand up. "

This is what addresses each of the points, as explained by the Ministry of Economy:

Retirement: it was determined as one of the axes because it is considered to be one of the populations that were being most affected by the crisis, which is not only economic but also social. He said that "in the only year of the previous government in which the economy grew, growth was not shared with retirees," so the project includes extra bonuses in December and January for those who perceive the minimum credit.

Tax: in the tax field, he said that the reform presented in 2017 was designed for a growing country, so it does not work at this time. On the contrary, “measures are currently needed to avoid a deterioration of the macroeconomics and the situation of the people,” said Guzmán. With levies on assets abroad, the local industry is sought to be reactivated, so “the possession of Argentine financial assets abroad will be aggravated, but there will be a system to encourage capital to return”.

In these measures, among others, the tax on dollars enters, as it is expected that the internal economy can grow and give strength to the Argentine peso. He said that "70% of the tax collection will be used to finance social security and 30% for infrastructure and housing works."

Tariffs: at this point, it is sought to dismantle what was thought in the previous management, so it will have “a maximum period of 180 days to change the tariff scheme for another that has an adequate balance between social protection, production, and promotion to the investment in energy ”.

Debt: this is one of the determining axes in the economic crisis of the country because it was impossible for the previous government to settle it. Therefore, "the Bill will empower the National Executive Power to carry out the necessary steps for debt sustainability," says Guzmán. That is, that economic recovery projects must be aligned with the intention of reducing debt and that economic growth itself is a function of this.

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