Times Staff and Wire Reports

Argentina Announces Tax Increase: The $3.55 billion in new taxes are designed to ensure the country can pay its foreign debt and avoid a devaluation of the Argentine peso. The new taxes come a day after the government announced $6.7 billion of new loans from international agencies to enable the country's faltering financial system to escape from pressure created by Mexico's currency crisis. Argentina's foreign currency reserves have shrunk by 25% since Mexico devalued its peso on Dec. 20, triggering fears that other countries in the region could do likewise. The government said most of the additional revenues will come from a three percentage point increase in the rate of value added tax, currently 18% on all retail sales. This should provide an extra $2.55 billion.

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