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ECONOMY | 18-08-2018 09:51

Soy exporters suffer brunt of US$2.25b austerity package

The government hopes to save 65.5 billion pesos in the next 16 months by freezing planned tax cuts on soy byproducts for six months and winding back export duty rebates.

The Mauricio Macri government will implement a series of austerity measures aimed at saving the national economy 65.5 billion pesos (US$2.25 billion) in the next 16 months, the Treasury Ministry announced Tuesday.

The measures, which are the first concrete package of savings since the government signed off on a US$50 billion stand-by loan deal with the International Monetary Fund (IMF), are aimed specifically at the agricultural sector, including the suspension of planned tax cuts on soy oil and flour exports for six months, Treasury reported.

The government has stripped the country’s provinces and municipalities of a fund through which they could access 30 percent of the total income generated from soy exports.

The amount paid to them in the way of export duty rebates was also cut, by 66 percent, on the basis that tax reform and a fiscal agreement signed in February with provincial governors had recompensated producers for previous indirect export tax implications.

The government hopes to save 12.5 billion pesos in what remains of 2018 and another 53 billion during 2019, the Treasury Ministry announced in a press release.

A delegation of IMF technical officials will visit the country on Monday.

When it comes to export duties on soy, the government has maintained the planned decrease in soybean levies. However, according to official data, soy levies have been continually dropping, from 35 percent in 2015 for soy beans to the current 26 percent, with a forecasted 18 percent by December, 2019.

With regards to oils and flours, levies have dropped from 32 percent in 2015 to the current 23 percent and are also expected to reach 18 percent by December next year. The additional income for the national coffers is expected to be 1.5 billion pesos in 2018 and 12 billion in 2019, the Treasury Ministry announced.

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