October 2, 2020
1. The Government announced a package of economic measures to strengthen exports
On Thursday afternoon, the government announced a series of economic measures in order to promote key sectors for the development of exportable goods. The announcement was made by the Minister of Economy, Martin Guzmán, who confirmed a transitory reduction of three months to the aliquots of export rights for the soybean complex, in addition to a program of compensation and stimulus to small soybean producers and cooperatives. At the same time, there will be a decrease in export duties for industrial final goods to 0%, industrial processed inputs to 3% and metals to 8%. In the case of automobiles, the drop to 0% of final goods is only for incremental exports outside of Mercosur. Another of the measures announced has to do with an increase in export refunds: industrial at 7% and industrial processed inputs at 5%. On the other hand, two bills with tax benefits will be promoted to stimulate investment in the construction industry. Finally, Guzmán informed that a Coverage and Promotion Trust Fund will be created to provide sustainability to the Credit system.
2. The Central Bank announced adjustments in its exchange policy
Through Communication A 7123, the Central Bank (BCRA) announced that it will modify the tool to regulate the official exchange rate. In this sense, it will abandon the strategy of daily mini-evaluations and from now on will allow greater volatility in the variation of the exchange rate. In addition, a rise in the passive rate for passes was reported; this means that it will pay more rate for the money that the banks place in pesos to the BCRA, outside the Letras de Liquidez (LELIQ). Thus, the rate of passive passes would be 24%, which implies an increase of five percentage points with respect to the current level of 19%. At the same time, the monetary policy will manage the LELIQ stock and will give more importance to the Yuan, the Chinese currency, in foreign trade operations, although he clarified that there are no plans to activate the currency swap, which the national entity maintains with the People’s Bank of
3. INDEC releases poverty, economic activity and trade balance indices
The Argentine statistical agency (INDEC), reported that the poverty rate stood at 40.9% (18.5 million people) in the first half of the year, while homelessness reached 10.5% (4.7 million people). In the past year, 2.6 million people have crossed the poverty line and 1.3 million have become homeless. The monthly economic activity index (EMAE) registered a -13.2% drop in July compared to the same month last year, while increasing 1.1% compared to June of this year. The most affected sectors included fishing (-67.1%) and hotel and restaurants (-65.4%). Additionally, last week INDEC reported that the balance of trade registered a USD $1.436 billion surplus, with Brazil and China leading the way as Argentina’s largest trade partners.
4. Government launches Brazil-focused export plan
The Ministry of Foreign Affairs, alongside the Brazilian embassy, presented a 2020-2022 export promotion plan. The proposal comes in a bid to boost exports across multiple sectors and market Argentine products in Brazil, including agricultural products, knowledge economy services, energy solutions and others. The plan will focus on exporting to Brazilian states and regions that aren’t traditional recipients of Argentine finished goods and services.
5. The Senate resumes virtual sessions
The Senate resumes today the virtual sessions. One of the topics set for the session is the removal of funds from the co-participation of the Nation to the City of Buenos Aires, whose negative vote was already advanced by the opposition block, Together for Change. On the other hand, the Upper Chamber will debate the project that modifies the Knowledge Economy Regime, an initiative that was modified with respect to the project that was approved in June in the Chamber of Deputies. One of the changes it received in the commissions, was a discount of the Income Tax of 20% for the big companies; 40% for the medium companies and 60% for the small ones. In addition, the opinion of the Senate commissions clarified that only those services that “are for export” will benefit.