Argentine lawmakers approve economic emergency package

December 21, 2019 GMT

Argentina’s Senate on Saturday approved a key package of tax hikes and social spending sought by new President Alberto Fernández to confront the nation’s economic problems.

The measure, which had earlier passed the lower house of Congress, declares a public emergency through Dec. 31, 2020, and gives the government powers meant to cope with it.

The law imposes a 30% tax on purchases of dollars for many purposes and allows the government to impose taxes on exports — as much as 33% on soy, 15% on corn, 8% on hydrocarbons and minerals and 5% on some finished goods.

It also allows the government greater latitude to adjust pensions.

The administration said 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.