This afternoon Economy Minister Sergio Massa announced a new exchange rate called the “agro dollar,” which aims to boost agricultural exports and strengthen international reserve accumulation.
For a limited time, agricultural producers will be able to export soybeans, other soy products, and regional agricultural produce at a beneficial exchange rate of AR$300 to the dollar. The official exchange rate is currently AR$214 to the dollar.
Massa also announced a decree ruling a sanction model for the businesses that don’t comply with the 180-day deadline set by the law to liquidate their export income in pesos in Argentina. “The criminal law is not enough for those who speculate [with currency],” he said, adding that some companies “don’t play clean”. The sanctions will include a suspension of their permits to do business if they fail to liquidate before a deadline that will be set in the executive order.
In order to be eligible for the program, local producers will have to commit to comply with price agreements, maintain employment levels and take partin price agreements and maintain employment levels.
“We hope it will empower the exports sector and our currency, as well as our reserves in such an uncertain time at a global and local level,” Massa said.
Massa has launched two temporary preferential exchange rates in the past, exclusively for soybean exporters, in September and November of last year. They were around 30% above the official exchange rate. This time, the policy will be expanded to include regional economies which, according to Massa, include over 338,000 formal employees.
Regional economies in Argentina include producers of traditional products such as yerba mate, wines, citrus, rice, tea and wood. Precisely which local businesses will be eligible will be determined by the Ministry in the upcoming week, Massa said.
“We want Argentines to consume foods produced in Argentina at fair prices,” he said.
The new preferential exchange rate will start on April 8 and will seek to “simplify” the various exchange rates at which products and services are exported. It will last until May 31 for the soy grain agreements and until August 30 for regional economies.
The government hopes it will allow them to collect some US$15 billion during the second and third quarters of the year.
“The same way we took measures to protect and help producers that were victims of the drought with tax benefits, we also will take measures to promote exports and consolidate the agricultural sector,” Massa said at the end of March when he said the new agri dollar would be announced soon.
He added that the purpose of these measures is to strengthen international reserves in the second quarter, and “to continue the path of stabilization that Argentina has to go through.” The government is currently experiencing a severe international reserve shortage: in March alone, the Central Bank sold US$1.79 billion. It lost some US$2.86 billion in the first three months of 2023.
The Minister also said that another challenge is “currency simplification”, so that “everything that appears under different dollar names starts to operate under a more unified scheme.” Currently, there are approximately 17 different US dollar exchange rates, including the “Netflix dollar”, “Qatar dollar,” and “Coldplay dollar”.
“Selling Argentine labor to the world market is the only way of ending with the impression that Argentina’s economy enters a crisis every 10 years,” said Massa.