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ECONOMY | 05-01-2020 08:26

‘Strict’ foreign-exchange controls to stay in place, says Kulfas

“In the current context, strict exchange rate regulations are inevitable,” says production minister

Argentina’s “strict” foreign-exchange regulations will remain in force as the government seeks to stabilise the economy, the Pagina/12 newspaper reported Saturday, citing Production Minister Matías Kulfas.

Lawmakers last month handed President Alberto Fernández extraordinary powers to renegotiate debt terms with creditors and increase taxes, marking a victory on his first legislation since taking office last month.

“In the current context, strict exchange rate regulations are inevitable,” Kulfas, a former Central Bank official with close ties to the president, said in an interview with the newspaper.

Ensuring the stability of the economy is “absolute priority,” Kulfas told Pagina/12.

While the currency policies could be reviewed as growth normalises, “for the medium term, we will have to live with the current system,” he added.

Argentina is looking for novel ways to finance its upcoming foreign-denominated coupon payments, including recent peso-denominated bond sales. Its total debt load stands at US$332 billion, including loans from the International Monetary Fund. Outstanding debt with private bondholders is about US$148 billion.

The country needs a mechanism to lower the value-added tax for consumer products, targeting the poorest, Kulfas told the paper. The government will renegotiate electricity and gas rates, and ensure fuel prices are close to those of international crude.

The government will also analyze a trade deal between Mercosur, the South American trade bloc, and the European Union, and the impact on the productive sector.

– Times/Bloomberg

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