October 22, 2014
Senate was set to approve debt swap, consumer bills
The Upper House was expected to give its approval to the government’s bill establishing the local payment of debt swaps and a package of consumer-protection bills that includes controversial amendments to the Anti-Hoarding Law around midnight.
Vice-president Amado Boudou presided yesterday a Senate session in which ruling Victory Front (FpV) representatives and allies hope to pass key government-sponsored projects.
This was the first time Amado Boudou presided a Senate session since he was indicted for falsifying public documents.
Head of the Radical party (UCR) caucus Gerardo Morales questioned Boudou when the session started and presented a motion to "suspend" the Vice-president from Senate presidency.
The motion was supported by head of the FAUnen caucus Rubén Giustiniani but did not go through, while FpV Senator Miguel Ángel Pichetto denounced opposition forces want to "sanction" Boudou "as if he were a Senator".
France as debt payment location
In the lead-up to the debate, the FpV amended the debt swap bill to add France as a possible location for debt payments.
The inclusion of the European country was significant in that its legislation provides for protection against speculative attacks and presumably also may be more appealing for international creditors than Buenos Aires.
The original bill had specified the removal of the Bank of New York Mellon (BoNY) as the payment agent and the designation of Buenos Aires or another location suitable to bondholders but that would also allow for regular debt payments.
In addition, the bill allows for the opening of a new debt swap for bonds issued under Argentine legislation and creation of escrow accounts for the country’s holdouts and payment according to the terms of the 2010 debt swap.
The Renewal Front (FR) had formally introduced an alternative bill that featured the use of French legislation for a new set of temporary stopgap bonds, but it was blasted by kirchnerite representatives because of differences with other articles of the bill.
Senator Aníbal Fernández questioned FR's project saying some of its articles were "written by vultures", referring to holdout creditors, and pointed out another article insists with New York as payment venue.
The FR, meanwhile, rejected the original FpV bill and is reportedly unwilling to give its approval to an amended version as it does not include the structural reforms that it has called for in its own bill.
Origin of the foreign debt
The government did accept later as amendment of the debt swap project the creation of a bicameral committee to investigate the origin of external debt dating back to 1976.
The military dictatorship of 76' has long been addressed by President Cristina Fernández de Kirchner as coincidental with Argentina's foreign debt sudden rise.
No details have been revealed on the possible composition of the committee or its functions.
Graphic media tax cut
Meanwhile, and without debate, the upper house agreed to pass on a bill that reduces taxes on small and mid-seized graphic media businesses. Only two senators did not vote in favor: Juan CArlos Romero (PJ-Salta) and Norma Moranidni (Civic Front-Córdoba).
The law divides media groups in three: the ones which earn up to 62 million pesos per year will have to pay a 2,5 percent tax; the ones which earn between 63 and 128 million pesos will pay a 5% tax; and the ones which earn more than 128 million pesos will continue to pay the existing 10% tax.
Out of the 923 contributors, only 16 will not enter the tax cut, which would benefit 90% of media businesses.
Anti-Hoarding in the limelight
Senators were also expected to vote on consumer defence bills that have been widely criticized by largest business groups as unconstitutional.
Yesterday, the G-6, which brings together the heads of the country’s largest business, construction, industry, agricultural, banking and financial sectors, agreed to file a legal challenge against the Anti-Hoarding amendments should they be approved in the Senate and the Lower House.
The FpV had the numbers to secure approval in both chambers and the bills have received widespread support among consumer groups that feel that large companies take advantage of dominant market positions to their advantage.
As such, changes to the existing Anti-Hoarding Law would grant increased authority to the government to participate in the economic decision taken by producers. Furthermore, it establishes heavy fines for any violations of its terms that could reach up to 10 million pesos. The bill has already received been modified to exempt the smallest businesses and it also grants greater involvement of the judicial branch as part of any examination of productive processes.
Despite the changes, which were well-received when they were announced last week as the drafts were still in commute, the opposition has insisted that it will not lend its support to the new Anti-Hoarding Law nor the creation of a Price Observatory. However, there is great consensus among all senators for a bill that establishes an expedited conflict-resolution mechanism for consumers.