Tuesday, September 11, 2007

Gov't to Irradicate Inflation through Intervention

....we'll see, huh?

The article below is a translation as it ran in Uruguay Daily News today. It's amazing that they never think, "hey stop creating money faster than people create goods and services" is a solution...

Government Announces 7 Measures Against Inflation

Uruguay News

Yesterday, at a meeting between the President and the Ministers, Economy Minister Danilo Astori presented a package with seven measures to stop inflation.

This measures will entail a USD 65 million fiscal effort with the objective to act directly on four products which, according to the official analysis, are directly responsible for the rise in inflation: fuel, meat, wheat products, fruits and vegetables. The economy ministry has repeated several times that these products account for 60% of the increase in prices this year (4.74% out of 8.23%).

Vázquez’s cabinet and Frente Amplio party members expressed their support for Astori on the new measure. The PIT-CNT labor union applauded the government’s measures but considered them to be “insufficient.”
National Commerce and Services Chamber consultant María Dolores Benavente, called the government’s measures “positive.”

-According to information given by official sources to Últimas Noticias newspaper, last night, state energy company UTE received the price list of basic family products sent by the Economy Ministry Commerce Direction so UTE can print and distribute the list with their next bill. Yesterday, the Commerce Bureau received prices on 40 products and close to 100 items of merchandise sold in different parts of the country. Prices were processed and immediately sent to UTE.

-UTE rates will fall (4.3%) at a cost of USD 25 million annually and a 6% increase will be postponed until June 2008. This measure will take effect in January and will imply a USD 30 million decline in income for the state company.

-Fixed charges in ANTEL telephone rates will also fall 6.5% at a cost of USD 7 million annually.
-August CPI figures (1.73%) led the Economy Ministry to eliminate taxes paid by public companies for foreign currencies earlier than expected. The tax elimination, which was part of the new tax reform, was expected to be applied in January 2008 but was moved forward, at a cost of USD 8 million for the state (and USD 25 million less in collections for the state annually). The decree has already been created and will be signed next Monday by the ministers’ council.
-VAT exemptions on poultry at a cost of USD 2 million that will affect 17% of consumer prices and the acceleration of procedures to start vegetable exports and cause a slight reduction on prices for those products.
-Health care services will fall between 2% and 2.5%, which will be financed by employer contributions as planned by the tax reform.
-The government is planning a 2% reduction in fuel, which will be financed by the decline in the dollar exchange rate. State fuel company ANCAP parameters were calculated with an exchange rate of UYP 23.75 per dollar and last week the dollar closed at UYP 23.15.
The government expects to slightly affect inflation for October, November and December to keep inflation in the single digits for the year.

(Ultimas Noticias, Observa, 11 September 2007)

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