Speaking to farmers in the town of Pergamino on Thursday, Mauricio Macri announced the end of taxes on wheat, corn and sorghum exports and a tax cut on soybean exports, from 35 percent to 30.
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President Fernandez de Kirchner had fought the farmers since protests over her tax policies paralysed the agriculture sector and rocked her government in 2008.
Argentina’s President Mauricio Macri at his office after his inauguration at the Casa Rosada presidential palace in Buenos Aires.
Now exports on wheat and corn are set at rates as high as 23 percent. Argentina’s farmers have an estimated 17 million tones of soybeans, 20 million tones of corn and 10 million tones of wheat in stock. In a context of lower commodity prices, he continues, exporting grain is not enough to generate economic growth.
Agricultural minister Ricardo Buryaile confirmed that taxes would also be removed for meat and fish.
The country is one of the world’s largest livestock and grain producers.
“He who wants to import will be able to do so, and he who wants to buy dollars will be able to buy them”, Finance Minister Alfonso Prat-Gay said. “There will be fluctuations in the exchange rate but there will also be a central bank with the necessary tools to buy if the currency weakens too much or sell if it strengthens too much”.
The lifting of the controls was made possible by the fulfillment of several conditions, Prat-Gay said, citing Macris decree sharply reducing levies on agricultural exports, the appointment of new management at the central bank and the certainty of additional funds to bolster Argentinas worldwide reserves, now $24.28 billion. Exporters in both the industrial and agricultural sectors are pressing for a devaluation that would make their goods cheaper in global markets.
The move would mark a departure from the policies of fomer President Cristina Fernandez’s administration, which was able to keep the value of the Argentine peso afloat due to a currency-swap agreement with China, which helped to stabilize the country’s foreign currency reserve.
Agricultural exports are expected to total US$25 billion (RM108 billion) this year, a third of Argentina’s total exports. Macri encouraged farmers to grow even more and ramp up production of processed products.
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Argentines have long seen the dollar as a safe haven, in a country where inflation has been a historic bugbear of the economy. Those who want to exchange pesos for dollars under the current system have to document where they got the money, and can only buy relatively small amounts.
