Eight days after expressing his concern about Argentina's "extremely cheap prices," Luis Lacalle Pou announced on Wednesday a series of measures to alleviate the crisis that the exchange rate gap caused in the departments on the west coast of the Uruguay River.
The initiatives include a tax reduction for coastal businesses and a greater discount on the price of fuel, according to the statement released by the Presidency of that country.
The new measures respond to the exchange rate difference between the residents of the Río de la Plata. Lacalle Pou communicated them in a meeting to the mayors of two affected departments: Paysandú, Nicolás Olivera, and Río Negro, Omar Lafluf. The novelties also include Salto and Soriano.
The first consists of an extension of the "border law II", a rule that in 2022 extended the benefits that in October 2021 a law gave to companies located in the border area and that includes exemptions from the minimum monthly Value Added Tax (VAT) and retirement employer contributions, among other taxes.
According to the Presidency, these measures, planned for businesses "within a maximum radius of 60 kilometers from the border crossing" with "retail" activity, potentially reach about 10,000 taxpayers.
Due to the exchange rate gap, from neighboring countries they cross the border to take advantage of the low relative prices in fuels.
On the other hand, the Uruguayan Executive will entrust the National Administration of State Sanitary Works (OSE) and the National Administration of Electric Power Plants and Transmissions (UTE) - state water and electricity services - with the exemption of fixed charges to those covered by the border law.
The Government also ordered an increase in the amount corresponding to the reduction of the Specific Internal Tax (IMESI) on border gasoline and fuel disposals.
Thus, the price of fuels in the area, which by a decree of 2022 already had a discount of 30%, will have one of 40%. However, even with this initiative the price gap in this area will remain: while in Argentina the liter of fuel costs US $ 0.6 (at the blue exchange rate), on the Uruguayan side it will now be US $ 1.14.
As additional measures, the Presidency indicated that, for the border, the category of pharmacies will be incorporated into the discounts offered by the Bank of the Oriental Republic of Uruguay (BROU) and that a subsidy will be given to companies that hire a new person "based in the departments of Soriano, Río Negro, Paysandú, Salto and Artigas" under certain requirements.
For this last measure, it is requested that the person hired "is between 15 and 29 years old or over 45 years old" and "belongs to a household that is below the poverty line", which will give the company "a subsidy for a period between 6 and 12 months of 60% of the salary if the person is male, or 80% if she is a woman".
Uruguay's growing concern over Argentina's economic instability
On May 1, the Minister of Labor and Social Security, Pablo Mieres, said that the government was "worried" and seeking measures because of the "serious competitiveness problems" linked to the exchange rate difference with Argentina, which exacerbated unemployment.
Hours later it was Lacalle Pou himself who expressed his concern about the situation. "We have some problem in terms of competitiveness. Each one, depending on the economist with whom you speak, will tell you how much the dollar should be, but it is true that we have a mismatch in that sense, "acknowledged the Uruguayan president.
And he summarized: "The prices of Argentine basic goods are extremely cheaper and naturally the neighbors of the coastal cities consume where it is cheaper for them."
"It is difficult to keep up with the Argentine economy and its peso-dollar ratio," he lamented at the time, in statements to the newspaper El Observador.
Not only the Uruguayan ruling party came out to show its concern about the consequences that the last Argentine exchange rate run had in their country. On Tuesday, the opposition Broad Front called for "impact measures" on the border with Argentina, such as a greater discount on the price of fuel or enabling "microimportation."
"We know that it was imminent that other measures were going to be taken, there is already a road map," the mayor of Paysandú said on Wednesday, after his meeting with the president.
With information from EFE
.DB
See also