The Rural Association of Uruguay (ARU) maintained this Monday its traditional lunch with the main authorities of the economic team at Expo Prado, which had two casualties forced by the covid-19 cases of the Minister of Economy, Azucena Arbeleche, and the Undersecretary, Alejandro Irastorza. The meeting was attended by the director of Economic Policy, Marcela Bension; the director of Tax Advice, Pía Biestro; the director general of the Secretariat, Mauricio Di Lorenzo, and the president of the Central Bank of Uruguay (BCU), Diego Labat.
The dialogue with The Observer The president of the ARU, Gonzalo Valdés, said that it was a “very good meeting” where various topics related to the situation of agriculture in particular were discussed and an “evaluation” was made of the incidence of costs in production, competitiveness , the exchange rate and the fall that the international prices of the commodities that Uruguay exports are showing.
On the other hand, heARU conveyed to the authorities of the economic team its desire to join the coordination and be informed about the link between the issuance of a sustainable public debt bond (green), which the government plans to put on the market shortly. “We are interested in being close to the issue because they are important,” Valdés explained. Currently, a government team made up of Economy, Industry, Livestock and institutions such as INIA is working on this issue.
Foreign exchange delay “tolerable”
The head of the ARU said that the union “is concerned about the exchange delay. The Central Bank has a vision, which it had already transmitted to us relatively recently in a meeting with them.” According to Valdés, the authorities understand that the exchange rate “is within its fundamentals” and that “it is not intervening in the market.” In fact, Labat said on Friday at Expo Prado during a conference of the Confederation of Business Chambers that last August 31 marked one year without the direct intervention of the Central Bank in the foreign exchange market, and that a policy of transparency is aimed at so that the price of the dollar is set by supply and demand.
“Obviously we know that the interest rate affects the exchange rate,” said the head of the ARU, alluding to the increase in the cost of money (and which it plans to maintain at least until December) by the BCU to anchor inflationary expectations to the new inflation target range (3% to 6%).
“For now, and with the international prices that exist, it is (due to the exchange delay) relatively tolerable. Where prices continue to fall, the problem is going to be big based on the inflation in dollars that is generated,” Valdés warned.
On the other hand, the president of the ARU indicated that on this occasion the price of fuels and diesel in particular was not discussed. The leader recalled that the union has always supported the government’s position in the new rate setting scheme even before the LUC referendum. “It seems to us that it is a method that makes price fixing very transparent and that it is not used as a form of collection,” he said.
Valdés recognized and “appreciated the effort” made by the government with political decisions so as not to transfer all of the rise that oil had in the past on fuel rates to the public, and added that he hopes that if the drop in crude in international markets consolidate this is reflected in a lower price of diesel.
No signs for tax changes
In the Commitment by country of the government coalition, it was agreed to review the tax structure that agriculture has to reduce the incidence of taxes such as the Wealth Tax. The Minister of Livestock, Fernando Mattos, has publicly announced that he intends to move forward with these adjustments with his Economy counterpart, Azucena Arbeleche.
Valdés indicated that he “talked” about this issue with the economic team but clarified that today “there is no specific proposal” to move forward on that path. “We agree that it is not an easy thing to implement. For now, there would be no imminent change,” he said.
The authorities of the economic team chose not to comment to the press on the lunch with the ARU.
