Argentina: government announces stimulus

On Nov. 25 Argentine president Cristina Fernández de Kirchner announced an economic stimulus package that includes tax breaks for Argentines who repatriate money they’ve sent abroad and invest it in infrastructure, real estate, agriculture, industry or government bonds; tax breaks for firms that create new jobs; an amnesty on unpaid taxes for the smallest employers if they give formal employment status to off-the-books workers; and a $21 billion public works plan intended to double the number of jobs in construction.

On Dec. 5 Fernández announced an additional $3.85 billion stimulus package meant to boost the economy with $1 billion in cheap credits for the automotive sector, $1.1 billion in other consumer credits, and a 5% cut in export duties for wheat and corn—although probably not for the soy producers, who staged a series of strikes earlier in the year when Fernández tried to increase their duties.

The Fernández government has also been moving to regain control of funds and companies that were nationalized under the neoliberal policies of previous governments, especially during the administration of former president Carlos Menem (1989-1999). In November the government finalized legislation to nationalize some $24 billion in private pension funds, and
some of that money will be used to finance the infrastructure program. On Dec. 4 the Chamber of Deputies voted 152 to 84 to seize the country’s largest airline, Aerolineas Argentinas, from the Spanish company Grupo Marsans; the airline was privatized 18 years ago.

Argentina enjoyed five years of strong growth after its dramatic economic collapse at the end of 2001, but now it seems to have been brought down by the world economic situation. The Center for Financial Investigations at Buenos Aires’ Torcuato Di Tella University reports that consumer confidence dropped by 24% in November compared to the same period in 2007, while willingness to buy high-cost products like cars and refrigerators fell by 41%. (MercoPress, Montevideo, Nov. 26, Dec. 5; BBC, Dec. 4)

From Weekly News Update on the Americas, Dec. 7

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