January 10, 2020
1. Government relaunches price controls
The Argentine government revised a program imposing price controls on certain consumer goods, after penning an agreement with major brands across the country. The program imposes price controls on a total of 310 products, with an average reduction in cost of 8%. To differentiate the same program from when it was under the auspices of the Macri administration, the initiative will now be subject to quarterly review, include big brands and reinforce the systems of control in general.
2. Government introduces changes in import rules
The government announced changes in the system that grants automatic and non-automatic import licenses, through resolution 1/2020. The measure confirms the continuation of the SIMI (Integral Import Monitoring System) created in January 2018 for the management and issue of import licenses and added more than 300 products under the non-automatic licensing system, a system that could put imports on hold for up to 60 days, when it currently stands at 72 hours. With this in mind, the norm ups the tax burden for these products to 14.8%. Prior to the decision, IMF director for the Western Hemisphere, Alejandro Werner, stated that the Argentine government is “moving in a positive direction” given that the first measures taken by President Alberto Fernández are done in a way that takes into account the financial soundness of the country.
3. Province of Buenos Aires passes new tax law
On Wednesday morning, a new tax law for the province of Buenos Aires was passed, with modifications from the provincial Chamber of Deputies. The most important changes have to do with urban property taxes, as the new law states that only 10% of taxpayers will pay the 75% maximum rate, with the possibility of receiving benefits for paying a lump sum and can credit 55% more than the previous year – the original law reached nearly 3 million taxpayers, whereas the new law will only charge the maximum rate to 600,000. Additionally, the legislature set the aliquot for gross income for the production of medicine and 50% for port services established in the original product, added to a reduction in aliquots on gross income for retail and cable operators. Moreover, a mitigation on the hikes on automobile taxes and interest rates for port activity. In this sense, provinces are seeking to increase collection to confront debt obligations that are soon to expire. The government also granted advances to provinces in crisis, including Chubut, Chaco, Río Negro, Santa Cruz and Tucumán.
4. Government denounces actions taken by Venezuelan government
Stemming from the antidemocratic actions taken by the Venezuelan government against the opposition-run National Assembly, the Argentine government released a statement through the Ministry of Foreign Relations and Worship denouncing them. The Venezuelan executive branch attempted to prevent Naitonal Assembly President Juan Guaidó from entering the legislature and taking the oath of office as head of the legislature. “We reject this action and we implore the Venezuelan army to accept that the right path is exactly the opposite [of what happened]. The Assembly should be able to elect its president legitimately,” Chancellor Felipe Solá stated. Moreover, U.S. Special Representative to Venezuela, Elliott Abrams, stated that the swift denunciation of the Maduro regime’s actions on the part of the Argentine government were both surprising and interesting, and quickly framed it as a deterioration in the Venezuelan government’s backing in the region. Chancellor Solá will travel to Mexico, where he will participate in the Community of Latin American and Caribbean States (CELAC) conference and proposed a regional agenda that hopes to avoid social outbursts across the continent.
5. Justice dismisses U.S. hedge fund lawsuit against Argentine government
Justice Loretta Preska dismissed the first lawsuit from U.S.-based hedge fund, Aurelius Capital Management, against Argentina for the alleged fabrication of GDP statistics in 2013 and the subsequent omission of paying dividends on public titles – which are based on this figure. According to Preska, the presentation of the fund’s evidence against the country were not sound and, as a consequence, were dismissed by the magistrate as a basis to not continue with the trial. With this in mind, if Aurelius Capital management does not provide more evidence, the lawsuit will fall through and Argentina can avoid paying USD $3 billion to bondholders who in 2013 did not receive payment on the GDP coupon; a title emitted by the Argentine government during debt exchanges in 2006.