Aurelia Butler

Argentina is one of the world’s top food exporters and the sector is key to Latin America’s third-largest economy. Protesters waved Argentinian flags and rode tractors onto a road in front of the Casa Rosada presidential palace in the capital. It is rare for farmers to protest in Buenos Aires, as they usually hold such demonstrations in rural areas. Fernandez has intervened in the grains and meat sector, at one point limiting how much meat producers could export in order to prioritize domestic supply.Protesters held signs reading: “We pay for roads but instead get swamps” and “lower the taxes.” They also issued their demands for a reduction in taxes in a letter to the government that was read at the protest and later provided to the media.”We have a simple demand: we are no longer willing to fund the rope that is being used to choke us,” the letter read.The protest was not organized by a specific organization.Taxes rose under former President Mauricio Macri, a conservative, and have continued to rise under Fernandez, a leftist. A 12% tax is levied on wheat and corn exports, which rises to 33% in the case of soy, flour and cooking oil exports. Argentina has battled extremely high inflation for years – it hovered around 50% in 2021 – making food policy a particularly delicate task for the government. In the past year, farmers have also protested against limits on meat exports that Fernandez eventually relaxed. More

Eyeing the prices at a Budapest market hall, retired school nurse Maria Veres said she was grateful for a big January pension bonus from Viktor Orban’s government. It encouraged her to vote to re-elect the premier this month, but the windfall is almost gone already.Hungary’s highest inflation in 15 years is cutting into her freshly padded savings but has not yet hit her confidence in Orban, who she expects can protect citizens from rising prices and other economic problems.“These price tags are horrific,” she said, looking at a dozen eggs costing about 600 forints, or just over €1.50, up one-third from a year ago. “This sort of inflation, I thought it was a thing of the past. I hope Orban defends us from this somehow.”While he is buoyed by a fourth consecutive election win that extends his tenure as the EU’s longest-serving leader, Orban — who has said he is determined “to preserve financial stability” — faces some of the biggest economic challenges of his time in office.Soaring energy costs are straining Hungary’s ability to maintain state-imposed price caps, while global disruption from Russia’s invasion of Ukraine is denting prospects for growth. Heavy pre-election spending, and a row with Brussels that is delaying more than €7bn in EU aid, is further constraining room for economic manoeuvre.The EU funds are meant to finance projects to boost Hungary’s recovery from the pandemic. Orban wants to borrow the funds in the meantime but analysts said that would increase Budapest’s debt levels and financing costs.Ahead of Hungary’s election, Viktor Orban’s government gave away about €5bn in the first quarter in family tax rebates and pension bonuses, which strained the country’s finances © Bernadett Szabo/Reuters“If we can access [recovery funds], we will have to take smaller steps toward the financial market; if not, then we will be forced to take larger ones,” Orban told journalists this month, calling the strategy “prefinancing” until the EU money arrives.Part of the squeeze on Hungary’s finances stems from Orban’s generosity in the run-up to the April 3 election. The government gave away about €5bn in the first quarter in family tax rebates and pension bonuses. It also now faces lower growth and tax receipts because of the economic disruption caused by the Ukraine war. KBC’s Hungarian economist David Nemeth said the EU funds “would go a long way to help solve the budget problems” for Orban, who could then spend more on maintaining price caps and other measures to fight inflation.Despite his need for EU cash, Orban has said he will not make concessions to improve relations with the EU. “No matter the pressure on us, we will never back down,” Orban said.Fitch Ratings said this month that Orban’s clear election victory, and Brussels’ decision to start a process to penalise alleged rule of law abuses in the country, “could signal a hardening of both sides’ stances” and threaten growth forecasts. It also warned that a deterioration in governance standards in Hungary could undermine investor confidence and affect the country’s credit rating. Budapest’s rating is now two notches into investment grade with a stable outlook from all three major rating agencies.Lower ratings would raise borrowing costs. A negative spiral of higher debt, rising debt payments and lower credit ratings is a possibility, said Peter Oszko, Hungary’s last finance minister before the Orban era, which began in 2010.“Market debt is very expensive, hurts the budget balance, the interest on it is rising, but [Orban] can tap that for a while, hoping for an agreement with the EU,” said Oszko. “Time is tight but he will try to take his time, try a few vetoes, form a few alliances.”Oszko said the government should worry most about inflation. “Orban is not afraid to levy extra taxes on lucrative business sectors or issue bonds, as long as he can avoid leaning on the voters directly,” he said. “But a sustained double-digit inflation rate hurts everyone.”Gergely Suppan, an economist at Takarekbank, said he expected Orban would halt investment or allow the budget deficit to exceed 5 per cent, compared with the EU’s usual 3 per cent limit, before he touches price caps, which keep gas bills below €100 a month for an average household, far below western Europe’s.“If market prices were introduced, most people would fail to pay their bills,” said Suppan. “Utility prices have not changed since 2014, during which time net salaries more than doubled. We could handle 10, 20 per cent, but a fivefold increase would be nonsensical.”Orban has not ruled out more taxes on sectors like finance, energy, telecommunications and retail. “Whether special taxes on multinationals or others become necessary is up to the EU,” he said. “If Europe is unable to halt the energy price increase, we will be forced to take steps in Hungary.”Peter Virovacz, an economist with ING, said a fiscal adjustment of about 1 per cent of gross domestic product could be achievable via spending cuts but greater recalibration would mean tax increases.“We wouldn’t expect measures affecting the tax burden on labour but rather some sectoral taxes [in] banking, telecommunication and/or retail,” Virovacz said. “The caveat with these could be that companies will pass on the costs to households — which would strengthen inflation further.” More

WASHINGTON (Reuters) – The International Monetary Fund said on Saturday it held “fruitful technical discussions” with Sri Lanka on its loan request, while the World Bank said it was preparing an emergency aid package for the crisis-stricken country.Sri Lanka, an island country of 22 million people, is struggling to pay for imports amid a crushing debt crisis and sharp drop in foreign exchange reserves that has fueled soaring inflation. Prolonged power cuts and shortages of fuel, food and medicines have sparked nationwide protests.Sri Lankan Finance Minister Ali Sabry has been in Washington this week talking to the IMF, the World Bank, India and others about financing help for his country, which has suspended payments on portions of its $51 billion in external debt.The World Bank’s emergency response package includes $10 million to be made immediately available for the purchase of essential medicines, funds shifted from its ongoing COVID-19 health preparedness project, a World Bank spokesperson said.The global lender, which along with the IMF held its spring meetings this week, did not provide a total value for its package, but Sabry said on Friday that about $500 million in aid was being considered.The World Bank spokesperson said the package would leverage existing bank-financed projects and repurpose funds to quickly provide medicines, meals for school children and cash transfers for poor and vulnerable households.Support to provide cooking gas, basic food supplies, seeds and fertilizers and other essentials is also under discussion, the spokesperson said, adding that the World Bank was “deeply concerned” about the situation in Sri Lanka.The IMF said in a statement on Saturday that talks between its staff focused on the need for Sri Lanka to implement “a credible and coherent strategy” to restore macroeconomic stability, and to strengthen its social safety net and protect the poor and vulnerable during the current crisis.”The IMF team welcomed the authorities’ plan to engage in a collaborative dialogue with their creditors,” IMF Sri Lanka mission chief Masahiro Nozaki said in a statement after the country took steps to explore a restructuring of some $12 billion in sovereign bondsSabry told reporters on Friday that the talks with the IMF were focused on a more traditional Extended Fund Facility program, but that $3 billion to $4 billion in bridge financing was needed while this could be finalized.The IMF has said that Sri Lanka’s debt needs to be put on a sustainable path before it could make new loans to Colombo – a process that could require lengthy negotiations with China and the country’s other creditors.Sabry said on Friday that in addition to the IMF loan and World Bank assistance, Sri Lanka is discussing with India some $1.5 billion in bridge financing to help continue essential imports, and added that he has also approached China, Japan and the Asian Development Bank for help. More