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ECONOMY | 06-09-2018 09:44

Macri to meet governors as attention turns to 2019 budget for crisis relief

President Mauricio Macri this week described the country's current economic situation as "an emergency" and announced the temporary restoration of a series of export duties.

The Mauricio Macri administration is optimistic that provincial governments can agree to the 2019 Budget as a means of sending a strong message to international markets about Argentina's political and financial stability.

Provincial economy ministers will meet today with Macri's Interior Minister Rogelio Frigerio for a new round of negotiations, before their governors arrive next week for a key meeting with President Macri on Tuesday at the Pink House.

The Macri government believes it can send a strong sign of confidence to markets if it can manage to get the Budget passed in Congress later this year.

The peso has lost half its value against the dollar this year, hampering government efforts to get inflation under control. Argentina has already used a first US$15-billion tranche of the three-year line of International Monetary Fund (IMF) credit agreed in June, mainly to prop up its currency.

On Monday, the president described the country's current economic situation as "an emergency" and announced the temporary restoration of a series of export duties.

Argentina is one of the world's biggest exporters of corn and soy oil. Addressing rich agricultural exporters who will face export taxes, he said: "We know its a bad tax, but I ask you to undertstand that it's an emergency."

TALKS WITH PROVINCES

Tensions between the national government and provincial governments are high. However, the government is talking positive.

"We're close", government sources told Clarín. "We will not touch spending any more and with the measures we have announced, we should get there". The vote on the Budget in the Lower House is scheduled for October 24 while Senators should vote on it on November 13.

Despite the turbulence stemming from the huge slump in the value of the peso and strong calls from the opposition, the government does not intend to restore the $26-billion-peso (US$675 million) Soy Fund, which affects the finances of the provinces and particularly municipalities. 

Peronist mayors on Wednesday demanded the restitution of the fund. However, the government is sticking to its offer of lines of credit through the ANSES welfare bureau.

The national government also intends to transfer $43 billion pesos (US$ 1.1 billion) in public transport subsidy funding to provincial governments and another $14.5 billion (US$375 million) in electricity subsidy funding, meaning provincial governments can decide how to apply subsidies, if at all, in those sectors.

-TIMES/AGENCIES

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