President Javier Miley visited the grounds of the Argentine Rural Society (SRA)where the Autumn Angus Expo is held, a livestock exhibition and he promised the agricultural employers that will eliminate withholdings, the PAIS Tax and will lift the exchange rate. The president’s promises are not coincidental, the Government went through a week of increases in blue and financial dollars and the countryside is paying less while waiting for a devaluation to improve its profits.
Milei spoke from a podium and stated “clearly, my presence and my visit to Rural is a clear sign of support for this sector, which is so important in Argentine history and for the future of the country (…). And that, when we finish deactivating all the bombs that the Kirchnerists left us, there will be a free exchange rate.”
The president stated “and obviously, as the fiscal accounts begin to be recomposed and economic growth returns, first we are going to eliminate the PAIS Tax and then the withholdings will follow, so that the countryside is completely free.” Milei stated that “the countryside is going to have a fundamental role.”
Lower liquidation waiting for a devaluation
The Agricultural Intercooperative Confederation (CONINAGRO) reported that until mid-May “only 34% of the soybean production of the campaign has been sold.” This is the lowest level in the last six years.
The entity reported that the accumulated sales in the middle of this month were below 36% of the previous two years and the average of 40% of the previous five years, for the same period of the year.
Meanwhile, agricultural exporters are also liquidating less and this affects the low supply of dollars for exports in the official exchange market (which impacts the supply of cash with liquid). According to data from Ciara Cec, the foreign exchange settlement of Oilseed Industrialists and Cereal Exporters in the first four months of the year was US$6,433 million, although it is higher than what was settled in 2023 (drought year). It is 42% lower than 2022 in the same period. The agricultural employers’ associations benefited from the strong devaluation of the Minister of Economy, Luis Caputo, in December. However, now the countryside wants a higher exchange rate since the Government decided to raise it in recent months below inflation.
According to what was reported in the media, the Government is evaluating improving the “dollar blend”, it is a special regime for exporters that means that they can settle their exports by 80% according to the official dollar rate and the remaining 20%, according to the dollar rate. cash with settlement (CCL). The new proposal would be 70% in the official dollar and 30% in cash with liqui.
Milei’s promise to get out of the stocks is far from being fulfilled. Caputo assured the president that she would get US$15 billion to get out of the exchange trap. But the money did not arrive. The IMF raises inconsistencies in the economic program and questions the political consensus that the Government has to advance with the adjustment and counter-reforms.
Export and Country Duties, the ones that collect the most
The collection of Export rights and of COUNTRY tax increased in the first four months of the year 69.1%, 431.3%, respectively in real terms, according to data from the Congressional Budget Office. These are the two taxes that collect the most while the collection of taxes such as VAT, contributions and taxes affected by the fall in economic activity (which this same Government caused) falls.
According to Milei, withholdings and PAIS could be eliminated when fiscal accounts improve, but the rest of the collection will continue to decline as the economic collapse progresses. This means that the drop in revenue can progressively liquidate fiscal and financial surpluses as the recession progresses. For this reason, it will be difficult for the president to fulfill his promise to eliminate these taxes that raise the most.
Javier Milei spoke with his heart to the agricultural employers, but as they did, they will always respond with their pockets. Agropower will continue to moderate export liquidations, saving soybeans and corn and will press for a devaluation to increase their profits. The only losers from a jump in the exchange rate are the workers and the popular sectors, whose income will liquidate.
Source: www.laizquierdadiario.com
