MercoPress. South Atlantic News Agency

Chilean food exporters request government support to face weakening US dollar

Finance minister Felipe Larraín

Representatives from Chile’s Council of Food Exporters met this week for 90 minutes with the Chile’s Treasury Minister, Felipe Larraín, to express their concern over the loss of competitiveness in the sector as a result of the declining value of the US dollar versus the Chilean peso, and to propose a series of measures to address the issue.

The US dollar has continued to fall against the peso in 2010, and reached a 29-month low against the Chilean currency this week. A weaker dollar reduces export earnings, and negatively affects Chile’s competitive edge in global markets.

Among the key measures requested by the private sector Council was a proposal that the Government draw up an exchange rate insurance contract overseas for all Chilean exporters, to be defrayed by the government budget, in order to bolster support to the country’s GDP and protect jobs in Chile’s important export sector.

Similarly, the Council pressed the government on the need for an exchange rate insurance policy at the national level that would be accepted by financial markets, also to be paid for through government revenues.

Other measures encouraged by the Council of Food Exporters included: a plea to reduce “administrative bureaucracy” such as taxes on stamps and seals; promotional programs to improve the technological quality of production processes within the sector; a tax reform to eliminate the value-added tax (IVA) on imports of industrial machinery used to improve business productivity, and programs to promote worker training.

One participant in the meeting, Ronald Bown, head of Chile’s Fruit Exporters Association, emphasized the need to defend the competitiveness of the Chilean economy by matching the policies of other governments, especially regarding the administration income flows.

By Rick Helm – Santiago Times