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Argentina declares public emergency over growing economic problems

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Argentina’s Senate on Saturday approved a key package of tax hikes and social spending sought by new President Alberto Fernandez to confront the nation’s economic problems.

The measure, which had earlier passed the lower house of Congress, declares a public emergency through Dec. 31, 2020, and gives the government powers meant to cope with it.

The law imposes a 30 per cent tax on purchases of dollars for many purposes and allows the government to impose taxes on exports — as much as 33 per cent on soy, 15 per cent on corn, 8 per cent on hydrocarbons and minerals and 5 per cent on some finished goods.

It also allows the government greater latitude to adjust pensions.

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The administration said 70 per cent of the new revenue will be used for social programs and the rest for infrastructure and housing.

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Fernandez faces significant economic challenges: GDP is expected to shrink by 3 per cent this year, with inflation at 55 per cent and a poverty rate of 40 per cent.

Argentines’ purchases of dollars have been severely restricted to contain capital flight, and the country owes the International Monetary Fund and private creditors some $100 billion.

The official poverty rate is just over 35 per cent, but private studies indicate it could reach 40 per cent this year.