Argentina Makes Fiscal Pact With Companies to Control Inflation

On Tuesday, the administration of President Alberto Fernandez announced new measures to deal with the drop in purchasing power caused by the devaluation of the exchange rate and the increase in inflation.

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Customs Director Guillermo Michel announced the creation of a Price Renegotiation Unit through which the Fernandez administration will establish ninety-day agreements for companies to receive tax reductions in exchange for maintaining monthly price increases of a maximum of five percent.

"We are aware of the variation in the exchange rate. In order not to affect Argentines, we are establishing tax relief for companies so that they do not transfer the increase in the exchange rate to the final product consumed by citizens," he stressed.

The economic authorities held meetings with the most important wholesalers in the country, as well as with the large hypermarket chains that sell final products to consumers.

On Sunday, the Argentines attended primary elections (PASO) to choose those politicians who will compete for the presidency on August 22.

Earlier this week, the Argentine Central Bank decreed a devaluation of the peso of 18.3 percent. This decision immediately unleashed price increases amid the political uncertainty caused by the votes reached in the PASO by the far-right politician Javier Milei, who seeks to eliminate the Central Bank and adopt the U.S. dollar as mandatory currency.

Previously, the authorities published data showing that monthly inflation reached 6.3 percent in July. In year-on-year terms, the inflation rate reached 113.4 percent, which is a worrying figure for a country highly indebted to the International Monetary Fund (IMF).