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The president of Argentina set about abolishing the consumption tax on basic food! To ease the econo

Original title: alleviating the economic crisis, the president of Argentina began to cancel the consumption tax on basic food

Following the announcement of a series of temporary relief measures to improve people's livelihood, Argentine President Mauricio & middot; Makri began to cancel the consumption tax on basic food on the 15th to alleviate the economic crisis and increase his expectation of re-election as president.

Policy overweight

Makri announced in a televised speech on the 15th that 21% of the consumption tax on some commodities would be abolished, involving basic foods such as bread, sugar, milk, flour, eggs and rice, so as to reduce the impact of the fiscal tightening policy on the lives of low-income groups.

Makri said he hoped that this measure would reduce the pressure on the lives of 'millions of Argentines' I will remain committed to reassuring everyone so that the presidential election process does not affect the daily lives of all Argentines. "

On the 11th, the primary election of the presidential election was regarded as a weather vane. The results of the primary election showed that makri won 32% of the votes, and the opposition presidential candidate Alberto & middot; Fernandez got 47% of the vote. Argentina's financial market fluctuated due to concerns that the change of regime in Argentina led to an increase in the risk of national sovereign debt default.

Dante & middot, Minister of production and labour of Argentina; Sika said at a press conference later on the 15th that the consumption tax on basic food is scheduled to be abolished on the 16th, which will reduce the tax revenue of 10 billion Argentine pesos (about 174.2 million US dollars). The tax cut is expected to continue until the end of this year.

Touched by the loss of the presidential primary election and the shock of the financial market, makri signed a decree on the 14th to launch a series of relief measures for low-income groups and wage earners, including raising the minimum wage, reducing payroll tax, limiting gasoline prices, etc. The government will invest about $680 million in the implementation of the above measures.

Reuters interpreted that the economic stimulus measures promoted by the Argentine government in recent days run counter to the fiscal austerity policies implemented by Macquarie after he became president in 2015.

Exchange rate recovery

Opposition presidential candidate Fernandez previously served as chief minister of the Argentine cabinet and advocated policies such as foreign exchange control and trade protectionism. Investors worry that once he takes office, it may undermine the efforts made by the Macquarie government over the years to restore external confidence in the Argentine economy.

Fernandez told reporters on the 14th that his economic plan does not include letting Argentina default on its debt.

The exchange rate of the Argentine Peso against the US dollar began to fall sharply on the 12th, once about 25%. The stock price index fell 34.47% in three days.

The financial shock eased on the 15th. The exchange rate rose 5% to 57.4 Argentine pesos against the US dollar. At the close of the stock market on the 15th, the Argentine stock index rebounded by more than 4%.

Bank as

The Central Bank of Argentina did not continue to sell US dollar foreign exchange reserves on the 15th. The accumulated foreign exchange reserves sold this week reached 503 million US dollars.

Argentine officials say the central bank has foreign exchange reserves of $66 billion, of which about $20 billion can be used to stabilize the exchange rate and repay debts. The remaining matured debt in 2019 is expected to be between us $5 billion and US $10 billion. It is expected that the government will have limited space to use foreign exchange reserves to stabilize the exchange rate. Fernandez pointed out that Macri's over commitment to the market may lead to the depletion of foreign exchange reserves.

On the 15th, the central bank asked private banks not to exceed 5% of the total funds from August 20.

Reuters quoted sources as saying that this will encourage private banks to sell dollar inventories, so as to further curb the decline of the exchange rate when the Argentine central bank does not sell dollars. Individual private banks may have begun selling dollars.

According to Argentine stockbroker Gustavo & middot; Quintana's judgment, 'the measures taken by the central bank have produced results & hellip& hellip; We began to slowly curb the momentum of the continuous appreciation of the US dollar.