By Garra - 11/01/2024 in World

Currency devaluation could benefit Argentine agribusiness, but export taxes raise concerns

The Argentine economic scenario remains uncertain following the announcement of the first measures by the new president, Javier Milei. Economists and representatives of Argentine agribusiness are assessing possible impacts on the sector, considering a devaluation of the currency and changes in export taxes. 

The Minister of Economy, Luis Caputo, announced that the dollar would be worth 800 pesos at the official exchange rate. He also announced changes in the so-called retentions (export taxes), heavily criticized by the Argentine agricultural sector. 

The government’s proposal raises the taxes on corn and wheat from 12% to 15% and meat from 9% to 15%, while soy would continue to pay 33%. However, these tax changes must be approved by the Argentine Congress.

David Miazzo, the chief economist at the Agricultural Foundation for the Development of Argentina (Fada), told La Nacion newspaper that the increase in the dollar value tends to be positive for the sector, as it increases revenue from exports. 

The currency devaluation announced by Milei’s government also reduces the difference between the official exchange rate and the parallel one, the so-called blue dollar, whose rate has a freer variation and approaches a thousand pesos per dollar. 

The risk, according to Miazzo, is that the exchange rate for exporting could be higher than that for importing, which would bring higher costs to the sector, dependent on foreign inputs.

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