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Argentina's Congress approves supply law; business frets
September 18, 2014 / 11:33 AM / 3 years ago

Argentina's Congress approves supply law; business frets

BUENOS AIRES, Sept 18 (Reuters) - A bill that would allow Argentina’s government to intervene further in the nation’s troubled economy narrowly passed its final legislative hurdle early on Thursday when the House of Deputies voted 130-105 to approve the so-called supply law.

The measure, frowned upon by big business and the country’s key grain sector, allows the government to determine private industry production levels and confiscate merchandise from companies judged to have increased prices unjustifiably.

President Cristina Fernandez, who has increased the state’s role in Latin America’s No. 3 economy during her nearly seven years in power, is expected to sign the measure into law.

House member Diana Conti of the ruling “Frente para la Victoria” coalition said during the marathon debate that the new rules would “help us ensure that the executive branch has the instruments needed to protect consumers.”

Advocates say the measure, which had already passed the Senate, is also designed to stem job losses in times of crisis.

Leaders from the agricultural, banking, industrial and retail sectors vow to sue to get the law thrown out on grounds that it violates private property and trade rights.

Markets, already rattled by Argentina’s July debt default, will watch closely to see how the new rules are enforced in a country where private economists expect inflation of more than 30 percent this year as the peso weakens and the economy shrinks.

The farm sector worries that the measure will allow the state to grab corn and wheat crops if it decides domestic food prices are too high. Economy Minister Axel Kicillof said those fears were unfounded.

“The state does not want to intrude on the economy, but it does have to regulate the economy,” Kicillof told local radio while the bill was being debated Wednesday afternoon.

“The government does not have the ability or the desire to control all the comings and goings of the economy, all the prices, or go confiscate grains from the silos,” he added. “That’s all fantasy.”

But Martin Fraguio, executive director of Argentina’s Maizar corn industry chamber, told Reuters the measure threatened farmers’ rights over their own crops.

“This puts the entire corn chain - planting, harvesting, buying and selling - at risk,” Fraguio said.

Argentina is the world’s No. 4 corn exporter and No. 3 supplier of soybeans. (Additional reporting by Sarah Marsh, Maximiliano Rizzi and Nicolas Misculin; Editing by Lisa Von Ahn)

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