January 3, 2020
1. Government passes law granting greater powers to executive branch
The national government passed Decree 99/2019 – the Social Solidarity and Production Reactivation Law – a measure that grants greater powers to the executive branch. The final version contained slight modifications to the bill passed by the legislature only days before, including articles that regulate employer contributions, personal goods, the PAIS tax (a 30% tax on the purchase of foreign currencies, products and services), as well as export and import duties. The law notably changes export duties to 5% for the sale of services, a similar percentage to what was collected by a withholding tax of ARS $3 per each USD $1 on exports imposed by the Macri administration. The PAIS tax was cut to 8% from 30% for digital services and tourism and the tax on tickets to bordering countries was suspended. Moreover, the measure set a cap on the import tax at 3% and set an end date of March 31st to repatriate foreign goods and obtain benefits set out by the law.
2. National government imposes economic measures in a bid to put brakes on inflation
The national government passed a series of measure intended to halt inflation and reactivate the economy, especially for the socioeconomic sectors and industries hardest hit by the economic tumult. Included in these measures are: Price controls – the government will renew a program that places special prices on basic household items, which had an expiration date of January 6th. The previous law did not include major nutrition, beverage and personal hygiene brands. The new law will be amended according to agreements between the private sector and the government on a quarterly basis. At the same time, beneficiaries of the ARS $700 monthly stipend per child and retirees receiving minimum pension will be refunded through the value-added tax. The value-added tax will once again be levied on basic household goods starting next Tuesday; Medicine – the first sector where a reduction in tax was agreed upon (8%); Public services – there will be no hike in gas and electricity fees for 180 days; Public transit – the government will freeze subsidies and price hikes in this sector for 120 days, including trains and taxis in the Buenos Aires metro area; Gasoline – the government suspended a 5% increase in prices until the 31st of January, while awaiting the impact it would have on inflation; Tolls – Coastal areas will be spared toll fees during the holiday season. Bonus- Another measure taken by the Government was the negotiations with business chambers and unions to decree a salary increase for all workers in the private sector, which will establish the payment in two installments of a remunerative bonus of AR $4,000. The national state workers, regardless of the increases planned for these months, will receive a similar bonus.
3. Social pact agreed to by business chambers, labor unions and social movements
President Alberto Fernández joined business leaders, labor representatives and social movements to announce the implementation of the “Argentine Compromise for Development and Solidarity.” This measure hopes to impose long-term agreements that go beyond presidential term limits and include common goals and milestones that can be reached on a step-by-step basis. The agenda sets forth goals that include a timeframe for the renegotiation of retirement credits and public service fees, the creation of quality employment, stimulation of investments and value-added exports, facilitation of access to credit for housing and production and the promotion of SMEs.
4. Congress to convene for the remaining summer months
By way of a presidential decree, both legislative chambers will be obligated to convene during the remaining summer months (southern hemisphere), following a predetermined agenda. The first session will take place in the Chamber of Deputies on January 22nd and will touch on the so-called “retirements of privilege” and a reform of the federal justice system. A debate on the fiscal consensus between the national government and provinces, as well as the nomination of a central bank president and board are still pending
5. Alberto Fernández to stay in Argentina through February
President Fernández opted to stay in Argentina and not schedule foreign trips during the first two months of the year as a result of the country’s critical economic situation. Chancellor Felipe Solá will be tasked with foreign meetings during this time. Next Wednesday, Solá will travel to Mexico to take part in the Celac summit, one of the regional bodies President Fernández hopes to strengthen during his administration. Following the meeting, he will meet with his Brazilian counterpart Ernesto Araújo – the result of telephone conversations and a formal invitation. To that respect, the chancellory commented, “The meeting’s agenda will center on bilateral and regional regional relations, as well as topics pertinent to Mercosur.” Moreover, the government is still evaluating which officials will represent Argentina during the upcoming World Economic Forum in Davos, Switzerland