Throughout his management at the Ministry of Economy, Sergio Massa implemented several programs aimed at increase exports In order to counteract the negative effect of exchange gap in it foreign tradesince a cheap official dollar favors imports to the detriment of exports. However, the countryside continues to demand that the Government reduce the withholdings and some voices from the ruling party say that, although no regulation was made, in fact, They are already enjoying that benefit.
Salvador di Stefano, expert in finance and agribusinesspoints to Ambit that, “through the soybean dollarthe Government lowered the impact of the withholdings for the sector and he did the same with the other differentiated exchange rates.” This was achieved through a reduction in the exchange gap that brought benefits to the producer.
Dollar for agriculture: how the countryside benefited
“Those differentiated dollarss helped that the field would earn more money“Without a doubt,” he says. In fact, sources in the sector acknowledged to this medium that, “Although exporters paid withholdings on all their shipments at 33%, producers in practice had a substantial reduction in withholdings since Massa became minister.”.
In fact, among the programs soybean dollar 1, 2 and 3they received extra income for about US$2.9 billion (US$1,446 million in the first with a dollar at $150, US$852 million in the second with the dollar at $180 and US$594 million in the third with the dollar at $250), according to sector data, and for around of US$16 million in the framework of the soy dollar 4with an exchange rate of $366.
Also, the percentage equivalent to withholdings was 14% in the first edition, 7% in the second, 20% in the third and 14% in the last, if the special adjustment of the exchange rate is taken into account and depending on the relief that this measure implied for producers.
Soy dollar: it is not a reduction in withholdings, although it looks like it
However Salvador Vitelli, financial analyst at Romano Group, believes that “it cannot be said that this amounted to a removal of withholdings because the State continued to collect export duties.”
He points out that what was done was to implement a different exchange systemwhich, although it meant for the exporter a improvement in income What could it be equivalent to the removal of withholdingsassuming that would imply not recognizing that there was an improvement in the exchange rate.
“It seems to me that this is distorting the data and that can lead to erroneous analyses. What was done was to adjust the export exchange rate because the official one is really very behind,” says Vitelli.
And he considers that it is fair to say that, although the increase in the price of soybeans equivalent to the removal of export duties, the truth is that the treasury continued to receive the same benefits. “What was done was to improve the price of the export dollar,” he summarizes.
What Massa did was give him a great help to the soybean holder in the first versions of the program and then incorporated corn and regional economies in successive renewals. That was beneficial for the BCRA and for the field because the first managed to pocket more dollars to its reserveson the one hand, and the second was able to improve its income.
But, some voices warn that the Negative collateral effect was an increase in the price of agricultural products that require grains as a basic input to add value (such as poultry and livestock farming)., which had an impact on the pocket of the final consumer, the Argentine who went shopping. That, on the one hand, but, on the other, made there are no more saved soybeans”warns Di Stefano.
So, those will be the two main challenges for the government going forward: how to control the impact on inflation without affecting reserves and how to maintain the flow of export settlements.
Source: Ambito
