Argentina unveils ‘emergency’ austerity measures
BUENOS AIRES — Argentine President Mauricio Macri has announced he was slashing his government’s bureaucracy in half and restoring taxes on grain exporters as part of sweeping new austerity measures to stabilize the economy.
His center-right government also aims to persuade the International Monetary Fund to speed up a $50 billion loan program.
The president admitted in a speech to the nation that Argentina was facing “an emergency” after its currency, the peso, lost more than half its dollar value this year.
“We must confront a fundamental problem: to not spend more than we have, to make efforts to balance the state’s accounts,” he said in the televised address.
He pledged a pared-down government following cuts that would see the number of ministries slashed from 22 to 10 in an effort to save money, demoting more than half his ministers.
The move had little immediate effect on the markets, slipping back near the record lows of last week, closing 2.7 percent lower at 39.04 to the dollar.
Some analysts warned it could slip further in coming days as the focus turns to Washington, where Finance Minister Nicolas Dujovne was scheduled to talk with IMF officials on Tuesday about accelerating disbursements from the loan deal, agreed in June.
Thousands of laid-off government workers took to the streets of Buenos Aires to protest the government’s austerity program. And such measures are likely to garner pushback from farmers who already had the poorest harvest in at least a decade due to drought.
New export taxes
Argentina is one of the world’s biggest exporters of corn and soy oil. Macri’s market-friendly approach had previously seen him cut taxes on major grain exporters.
The president has blamed the crisis on a variety of external factors, including rising oil prices, the US Federal Reserve raising interest rates and sparking capital flight, and a drought that impacted agriculture.
Addressing rich agricultural exporters who will now face increased export taxes, he said: “We know it’s a bad tax, but I ask you to understand that it’s an emergency.
“We ask those who have more capacity to contribute, those who export, that they make a greater contribution.”
In a bid to reassure worried Argentines, he said he would allocate more aid to the country’s poor as 25 percent inflation has left many struggling.
“We will overcome the crisis by taking care of the most needy,” he said, promising “increased allocations, food programs and price caps on some commodities”.
We know it’s a bad tax, but I ask you to understand that it’s an emergency.” Mauricio Macri,