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ARGENTINA

Argentina passes contested price control law

AFP I Argentina's congressional chamber
Text by: NEWS WIRES
2 min

Argentina’s Congress passed a bill Thursday giving the government powers to regulate prices and production in a bid to control runaway inflation, a measure condemned by the business community.

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Argentina’s Congress passed a bill Thursday giving the government powers to regulate prices and production in a bid to control runaway inflation, a measure condemned by the business community.

After a marathon session that stretched until dawn, President Cristina Kirchner’s center-left government leveraged its majority to get the bill through by a vote of 130 to 105, with five abstentions.

The law gives the government the power to set profit margins and reference prices. Firms that unduly raise prices or hoard goods face fines of up to $1.2 million and bans on doing business for up to two years.

Two parallel bills set up a public price watchdog and a new consumer protection authority.

The Argentine government is struggling to tame inflation that came in at 18.2 percent for the period from January to August, according to official figures.

Annual inflation was 25 percent in 2013 and will likely be even higher this year, according to private economic research firms.

< The South American country is mired in recession and in July defaulted on debt tied up in a US court battle with two hedge fund creditors.

A lobby group of bankers and business magnates called the Group of Six said the new law would only worsen the economic situation by hurting production, investment and unemployment.

The group condemned the “extraordinary powers” granted to the government as unconstitutional and said it would seek to have them overturned in court. Cabinet chief Jorge Capitanich said the law exempted “small and medium companies, which create the most jobs.”

But the head of the Argentina Industrial Union, a powerful business group, said the law was “a very powerful weapon that can be used at the government’s discretion, and that is a substantial danger.”
 

(AFP)

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