Argentine Government Secures Tax Cut Deal

by Mike Godfrey, Tax-News.com, Washington

16 November 2001

The remainder of Argentine government's opposition-run provinces have agreed to sign an austerity pact at the eleventh hour to save the country from what could have been the biggest debt default in history. Earlier this week only 13 of the 23 provinces had agreed to a reduction in their share of federal tax revenues to help the government guarantee a 'default-avoiding' bond swap.

But reports from Reuters news agency have confirmed that the influential key Peronist provinces such as Buenos Aires, La Pampa and Santa Fe have agreed to the $1.36 billion reduction in tax revenues. 'The country is in danger and I think this plan is maybe the government's last opportunity to get out of this crisis that all of us are suffering,' said governor of the province of Cordoba, Jose Manuel De la Sota.

Marcelo Tain, head of local brokerage, SBS, told Reuters: 'This is fundamental for Argentina finding a way out of all this.'

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