AP NEWS

Economic emergency measure advances in Argentine congress

December 20, 2019 GMT

BUENOS AIRES, Argentina (AP) — The lower house of Argentina’s Congress approved an economic emergency package on Friday that would raise taxes on many purchases of dollars and farm exports while expanding social programs.

Passage was a victory for the new President Alberto Fernández, who took office 10 days ago, with members of other parties joining his Peronists in approving the measures.

Following the approval in general, legislators were going through the bill item by item and could made amendments. The measure also must be approved by the Senate before taking effect.

The current version would impose a 30% tax on purchases of dollars for many purposes, would raise a tax on soy exports to as much as 33% and on corn up to 15%, while also raising taxes on some personal goods.

Taxes on hydrocarbon and mining exports could reach 8%.

The measure also would allow the government power to freeze prices for energy services.

The administration says 70% of the new revenue will be used for social programs and the rest for infrastructure and housing.

Fernández faces significant economic challenges: GDP is expected to shrink by 3% this year, with inflation at 55% and a poverty rate of 40%.

Argentines’ purchases of dollars have been severely restricted to contain capital flight, and the country owes the International Monetary Fund and private creditors some $100 billion.

The official poverty rate is just over 35%, but private studies indicate it could reach 40% this year.