Between the Ministry of Production and the Ministry of Finance are giving the last stitches to the text that will define how the scheme of export refunds will remain after the cuts. In the middle of the exchange turbulences, the Government left to reaffirm that it will maintain the fiscal course. That is, it will sharpen the pencil to further adjust public spending. With losses of up to 66% in these benefits, the Treasury estimates that it will save $ 34,000 million between this year and next.
The text that will be published this Thursday in the Official Gazette will establish different rebates on export refunds: it will be 66% for activities with little added value (mining, steel, oils, among others) and there will be no changes for sensitive sectors, like textiles and footwear. In addition, the Government promised that SMEs will automatically collect their withdrawals. This will allow to reduce strongly the associated financial times and costs. SMEs represent 90% of export operations and 10% of volume.
“We have to give firm signals that we are going to stay the course and we will continue to comply with the fiscal program,” Minister Dante Sica said, detailing the measures. The reading made by the Government is that with the rise of the dollar and the tax reform last year, exporters are in a position to bank a cut even if the measure does not like them. “We have to balance the macro although in the short term those measures hurt,” Sica said today, on the occasion of the Day of Exportation.
The production calculations indicate that the withdrawal of the reimbursements “is made with a multilateral exchange rate 25% higher than the level that was in 2014/15”. And with the tax reform approved last year, the tax burden fell 1 percentage point for exporters.
The sectors that will have lower losses – a reduction equivalent to 1.5% of the improvement of the real effective exchange rate – are dairy products, paper and cardboard, leather and hides and coffee. And it will remain unchanged for toys, shoes, clothing and furniture.
The drop in reimbursements will have a greater impact and reach 66% in the areas with low sectoral linkage and in extractive activities, such as aluminum, steel, oil, minerals, fuels and cars.
The production calculation is that for the exporters the real impact is on average 2% on the effective real exchange rate. In the case of steel tubes, the impact is 5%; for passenger vehicles it is 8%, for sunflower oil, 3% and for pieces of machinery, 4%. According to the accounts of the Government, even with the cut of the reimbursements, the sectors continue to have an improvement of the multilateral exchange rate in relation to 2015 between 8 and 56%.
The reimbursements allow the exporting companies to recover totally or partially the amounts they pay in internal taxes. But the return is not automatic and tends to take several months, which further complicates the companies in an inflationary context.
With this measure, the Ministry of Finance expects to achieve savings of $ 5,000 million in the remainder of this year and another $ 29,000 million next, which represents 20% of the fiscal deficit fall foreseen for 2019.