MercoPress. South Atlantic News Agency

Repeal of latest farm export tax estimated in 1.5 billion USD

The Argentine government decision to repeal the controversial grains and oilseeds sliding export tax system, --which triggered a four month conflict with farmers-- will cost the Treasury an estimated 1.25 to1.5 billion US dollars according to economic experts quoted in the Buenos Aires media.

The sum is the difference between what the government was planning to collect with the new system implemented last March, which meant increasing taxes on exports depending on the price oscillation in international markets and the fixed rates of 35% to which the government was forced to return. However in spite of the lesser revenue than forecasted, Argentina is expected to end the financial year with a primary surplus, and again in 2009, equivalent to 2% of GDP, "just enough to cover debt interest payments" said economist Ramiro Castiñeira from consultants Econometrica. Nevertheless La Nacion reports that the Ministry of Economy is planning some ministries must cut their outlays for next year. "But in the short term the government is not planning savings, rather the contrary in an effort to recover lost popularity and take advantage of the current feeling of distension prevalent in Argentina", added La Nacion. Among the options under consideration by the government of President Cristina Fernandez de Kirchner is an increase for the minimum wage and old age pensions, lowering income tax and measures to stimulate consumption, which has been contracting since the start of the conflict between government and farmers over four months ago.