President Cristina Fernandez's campaign to bolster the state's role in Argentina's economy took a big step forward on Thursday when lawmakers approved a bill that will allow the government to intervene in the pricing and output levels of large companies. The House of Deputies voted 130-105 early on Thursday for the so-called supply law. It enables the government to set profit margins and confiscate merchandise from private companies judged to have hiked prices unjustifiably.
The vote came despite strong opposition from big business and the nation's key grain sector. The bill has already passed the upper house of Congress. President Cristina Fernandez still has to sign the measure into law. This, though, is widely seen as a rubber-stamping exercise.
Fernandez's leftist government says the bill will protect consumers from unfair price rises and stem job losses in times of crisis. The administration has shrugged off opponents' criticisms that more state intervention will stifle the economy. The bill "creates the conditions for regulations by the state in order to prevent large firms abusing their strong positions and holding back stock without good reason," Cabinet chief Jorge Capitanich told reporters.
Capitanich said the bill would protect small and medium-sized companies, encourage investment and boost job creation. Leaders from the agricultural, banking, industrial and retail sectors vow to sue to get the law thrown out on grounds that it violates private property and trade rights. In a marathon debate that dragged on into the early hours of Thursday, opposition lawmakers accused the government of suffocating growth of the $490 billion economy.
"This government has a parasitic relationship with production and work because it feeds off them but simultaneously wants to destroy them," said legislator Carlos Brown. The supply law is one of a series of interventionist policies announced by Argentina since it defaulted on its debt in July. Rattled by the default, markets will watch closely to see how the new rules are enforced in a country where private economists forecast inflation may top 40 percent this year as the peso tanks and the economy shrinks.
The farm sector worries that the measure will allow the state to grab corn and wheat crops if it decides domestic food prices are too high. Economy Minister Axel Kicillof said those fears were unfounded. "The state does not want to intrude on the economy, but it does have to regulate the economy," Kicillof told local radio while the bill was being debated Wednesday afternoon.
Comments
Comments are closed.