Argentina says 'in a deep economic and social crisis'

BUENOS AIRES, Argentina

Argentina's new economy minister on Tuesday warned the country is going now through a "deep social and economic crisis" as the government is seeking congressional approval of a legislation that includes a series of measures.

"We are in a deep economic and social crisis," Martin Guzman told a press conference, adding that the measures seek to "protect the most vulnerable sectors," while "macroeconomic conditions, required to solve all the problems of Argentinian economy" are generated.

During the press conference, Guzman gave details on the Law of Social solidarity and Productive Reactivation, a series of measures the government wants to get approved this week at the Congress.

The briefing was focused in four main blocs: changes in retirement, tax measures, freezing of charges and public debt.

According the minister, these moves are aimed to “tackling the damage of macroeconomics and the decay of the purchasing power of the most vulnerable ones”.

As for the first point, Guzman said that “the retirement system has to be changed as it is not working”. Within 180 days, the formula used to calculate the jubilations will be replaced, and he confirmed what President Alberto Fernandez had announced on Monday: two bonuses of 5.000 pesos (some $80) will be given between December and January to those who charge minimum assets.

Regarding tax measures, he informed that aliquots (a proportion) of personal property will be rolled back to 2015 (1.25%), and financial assets abroad will be taxed by 2.5%, although he cleared that such assets will not be taxed for those who bring them to the country.

He also announced a “tax for an inclusive and supportive Argentina, a tax of 30% for the purchase of currency”, which is added to the surcharge of 30% on consumption abroad. 70% of what can be collected from this tax will be intended to social development, while the remaining 30% will be used for building of homes and public facilities.

Besides, he informed a “regularization plan of debt for small and medium companies and civil nonprofit organizations, so that they have means to produce again, grow and generate jobs. Whoever is in debt, needs a relief”, said Guzman.

With regard to the prices of the tariffs, the minister pointed out to a “new general framework to discuss a tariff scheme with the proper conditions to enable production and promotion of investment in energy”, which will be created in a period of 180 days. In the meantime, the suspension of the tariff increases will be maintained.

The last point Guzman referred to was the public debt.

“There was a brutal rise on the debt of Argentina,” said the minister, noting that the project seeks to empower the National Executive Power to implement debt policies that pursue “sustainability of public debt”.

“We want to make promises that can be met”.

“All these measures are thought as a part of a comprehensive plan to solve all the imbalances by defining priorities, paying respect to the macroeconomic consistence. We have to curb, as fast as possible, this fall, while trying to give Argentina a set of conditions that enable a smoother environment,” he concluded.

The draft legislation was already sent to the Congress. A plenary meeting of commissions is planned for Wednesday, and Thursday, an extraordinary session at the Chamber of Deputies, where it needs to be approved and then passed to a final stage at the Senate.

*Daniela Mendoza contributed to this note.