May 21, 2021
1. Government suspends beef exports
Via Resolution 75/2021 published in the Official Gazette, the government suspended exports of beef for 30 days in a bid to contain inflation, as well as domestic prices of beef and derivatives, which saw a 22.2% price increase between January and April of this year. The resolution, issued by the Ministry of Agriculture, Livestock and Fishing, met stiff opposition from agricultural interest groups, who proposed a ban on sales through May 28th. The Ministry of Productive Development, led by Matías Kulfas, justified the measure stating that, “regarding the sale of beef products, there is a distortion in prices that exceed general inflation indicators for foods, which impedes supply” to domestic consumers. The government stated that the suspension would end upon the resumption of a normal supply chain at reasonable prices that comply with agreements.
2. Trade superplus recorded in April highest since July 2020
April’s trade balance was recorded at a surplus of USD $1.47 billion, the highest such figure since July 2020, and exceeding the USD $1.455 billion reported in April 2020, according to figures from the Argentine statistical agency (INDEC). Exports reached their highest level since August 2014, increasing 41.3% compared to April 2020, due in large part to the 25.2% increase in prices and 12.9% increase in volume of goods exported. In seasonally adjusted terms, April exports decreased by 4%, while the trend-cycle increased by 2.6%, compared to March 2021, respectively. Meanwhile, imports increased 61.5% compared to the same month of the previous year (USD $1.78 billion), especially due to a rise in quantities of 52.6% and in prices of 5.8%. In seasonally adjusted terms, imports decreased 9.7% and, according to the trend-cycle, increased 1.4%, in each case with respect to March 2021.
3. Deputies approve bill altering tax structure for businesses and postponement of elections
Following a lengthy debate, the Chamber of Deputies approved a bill that establishes a new structure of graduated marginal income tax rates for companies according to the level of accumulated net taxable income. Budget Committee President Carlos Heller explained that the bill would have changes, “The first bracket will be maintained as established in the original bill, but the second bracket will change. [The second tax bracket] will be taxed at 30% for businesses with net profits between ARS $5 million (USD $53,036) and up to ARS $50 million (USD $530,362). The last bracket, of 35%, will be for those accumulated net profits higher than ARS $50 million,” he stated. With this modification, only a total of 5,432 companies would pay 35%, approximately 4.5% of all businesses in the country. In spite of the changes implemented, the Juntos por el Cambio and Consenso Federal coalitions rejected the initiative. Likewise, the lower house approved the bill that postpones mandatory primary elections until September 12th, and general elections until November 14th as a result of the pandemic. In this case, the approval enjoyed a broad consensus across coalitions, receiving 223 votes in favor, 3 against and 8 abstentions. Both bills will now move on to the Senate for final approval.
Ámbito: Diputados aprobó la postergación de las PASO y de las elecciones generales
La Nación: Diputados dio media sanción al proyecto que modifica el impuesto a las ganancias de empresas
Cronista: Diputados aprobó el impuesto a las Ganancias para empresas con cambios en las escalas del proyecto original
4. “Gondola Law” takes effect, price ceiling program extended
After having been passed in December of last year, the “Gondola Law” finally came into force, which obliges supermarkets and supermarkets larger than 800 m2 to have at least five suppliers per category of goods, and to clearly identify the cheapest option from each category to shoppers. Additinally, 25% of the products must be from SMEs or cooperatives, while 5% must be from family, peasant or indigenous agriculture or popular economy companies. The Secretariat of Domestic Trade, headed by Paula Español, warned that “non-compliance with the law will be punished with fines outlined in the Commercial Loyalty Regime, and those that may correspond to the Competition and Consumer Defense laws.” Another of the government’s strategies to fight inflation involves the price ceiling program which was extended through June 8th, although products were removed from the list. The list of categories removed includes olive oil, breaded soy, and other goods. On this occasion, the extension is shorter than previous extensions, since the government expects to finalize the new essential price agreement that would replace the price ceiling program in June.
5. New restrictions: government announced confinement in high risk areas
The President, Alberto Fernandez, announced a strict confinement for 9 days in the Metropolitan Area of Buenos Aires (AMBA) and areas of the country classified as high risk due to the increase of Covid-19 cases. Before announcing the measures, the President remarked that the country is going through “the worst moment of the pandemic” and urged for social and political leaders’ commitment. As for the measures, social gatherings are forbidden, both in open and closed spaces and in all areas. Public transport remains exclusive for essential workers and only circulation is allowed for activities of proximity such as going to the pharmacy, to buy something at a store or to the neighborhood square to walk, without permanence. As for essential commerce, they will remain open with the protocols in force. Non-essential commerce can work, but from the door to the outside. Gastronomic establishments will be able to work in the modality of delivery or pick up at the store, and from the door to the outside. In the case of construction and industry, they will be limited according to the provisions of the DNU of the National Government. As it will be published in the DNU, these measures will be in force until May 30, which means 3 working days, and as from May 31 the DNU proposes the return to the current situation.