Argentina imposes 35 % tax on foreign currency purchases to stave off hoarding

Argentina on Wednesday unveiled a new 35 percent tax on foreign currency purchases to prevent the public from hoarding U.S. dollars in the face of a weak peso. The Government said it would tighten currency controls to dampen the demand for U.S. dollars. Previous restrictions remain in place, including limiting citizens to buying no more than 200 U.S. dollars a month. The new tax does not apply to spending on healthcare, medication, books in any format, online education and software for educational purposes.

Government launches Local Supplier Development Program with $33.25 mn for agricultural machinery

The Government launched the Local Supplier Development Program, with a budget of 2.5 billion pesos ($33.25 mn) and targeting strategic value chains for the national economy. In this context, global brands of agricultural machinery are added to an official plan of local suppliers to develop national parts of world quality, at competitive costs and scales of production.

Private sector companies will be able to access only 40% of their dollar requirements for the financial debt

The Government issued a battery of measures with which it intends to reduce the demand for foreign currency, in which private sector companies will be able to access only 40% of their dollar requirements to pay financial debts in foreign currency and will have to present a detailed refinancing plan to initiate a process of renegotiation of their respective external liabilities. It occurs in a context in which reserves registered a notable fall to $388 million in September. So far this year, a retraction of $2.33 billion has been accumulated, while net reserves oscillate around $7 billion.

External debt rose to $329.4 billion in August

The Government reported that as of August 31, the public sector debt as a whole, in pesos and foreign currency, amounted to the equivalent of $329.4 billion, $2.05 billion more than the previous month, as a result of placements and assistance from the Central Bank for $4.74 billion and payment of debt maturities for $2.69 billion. Total debt accumulated $16.12 billion in 9 months.

4% average monthly inflation forecast for the rest of the year

Inflation rates averaged 2% per month between April and July due to measures taken by the government to contain price increases due to the pandemic. However, as the consulting firm Ecolatina warns, inflationary pressures will reappear in the coming months, and it projects an acceleration in the rise of the CPI, which would close the year just below 39%, with an average of 4% per month in the last four months.

The price gap between what the consumer paid and what the producer of agricultural products received fell by 15%

According to a report by the Argentine Confederation of Medium-sized Enterprises (CAME), the average price gap between what the consumer paid and what the producer received for the main agricultural products participating in the family table fell 15% in August, and the producer's share in the final price jumped to 28.9%.