Buenos Aires Times

Economy in brief: Sinopec, subsidies and tax changes

Main economic stories from the last days.

Saturday 2 December, 2017
The government has announced a cut in taxes on electronics in the Official Gazzette.
The government has announced a cut in taxes on electronics in the Official Gazzette. Foto:AFP.

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SINOPEC ON VERGE OF SELLING ASSETS

Chinese firm Sinopec is on the verge of completing a deal worth between US$500 to 600 million that would see the company sell off its oil assets in Argentina. According to reports by the Reuters news agency, which cited an unnamed source “with knowledge of the deal,” Mexican company Vista Oil & Gas is the purchaser, having seen off competition from state-run oil firm YPF and the private company Pluspetrol.


VACA MUERTA SUBSIDIES MAY BE CUT

Producers engaged in the exploitation of the Vaca Muerta shale oil formation may face a cut in subsidies, Bloomberg reported this week, as the government seeks to improve Argentina’s fiscal deficit.

Those seeking to drill new wells may still benefit from cheaper subsidies, but existing producers may experience lower subsidies, which usually offset high labour and transportation costs. Bloomberg speculated that the decision may cause producers like YPF and Pampa Energia to reconsider their production plans for the region.


NATURAL GAS PURCHASES AID BOLIVIAN GROWTH

Argentina’s purchasing of natural gas, along with its neighbour Brazil, seems to be helping Bolivia push its way toward improving economic growth forecasts.

Bolivia’s Economy Ministry reported this week that it anticipates GDP to grow 4.7 percent next year, in part driven by improving prices for natural gas exports. In 2017, Boliva said the GDP would rise 4.8 percent, basing expectations on prices US$45.50 per barrel of natural gas. However, trading prices are closer to US$57 per barrel.

Just last month, Energy and Mining Minister Juan José Aranguren went on record saying that Argentina was seeking to boost further the volume of gas it was purchasing from Boliva.


TAXES ON ELECTRONICS CHOPPED

The government has announced a cut in taxes on electronics in the Official Gazzette. Tarriffs for electronics will fall from 17 percent to 10.5 percent across the country and taxes will be eliminated entirely for products produced in Tierra del Fuego, a special economic zone and manufacturing region since the 1970s where more than 90 percent of Argentine electronics are made. The Production Ministry said taxes will be removed entirely by 2024.


CANADIAN PORK COMING

Canada’s government announced Wednesday that Argentina had approved the entry of pork imports from the North American country, a move that could be worth some US$12.5 million a year.


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