Brazilian Finance Minister Guido Mantega announced yesterday that the country will cut 28bn reales (US$13.7 bn) in spending for this year’s budget, mainly due to slower economic growth than expected.

“The scenario of the international economic crisis has led the government to adopt and maintain measures to stimulate the economy, which, at this time, include a reduction in taxes and increased costs,” he said.

Mantega stressed that these cuts will not affect social programmes, plans to modernise the country’s infrastructure, public housing, health programmes, education, poverty eradication, science, and technology. It also will not affect any funds for the 2014 World Cup or the 2016 Olympics. He said the sectors most affected by the cuts will be Defence and National Integration, and that previously made investment plans will not be altered.

He said the government took steps in recent months to reduce taxes to stimulate key sectors of the economy, while public investment increased. “Investments are what drive the national economy, and they will be preserved from the cuts,” he said.

Inflation will hit 5.2% this year, higher than the original projection of 4.9%. “We are not maintaining a fiscal government of inflation,” the minister said, denying that the government’s policies are causing the inflation.

The government had set a goal of 3.5% economic growth for this year, up 0.9% from 2012. However, given the slowing of growth, Mantega said the government is revising this goal and will announce the new goal on 29th May.

Despite the cuts, the minister said the government’s original surplus target of 3.1% will not be possible, and it is more likely that GDP surplus will be around 2.3%.

Union members from the steelworkers, trade and banking industries met with the government yesterday to agree on a 24% wage increase.

The agreed wage hike is in line with Argentina’s rising inflation, which independent economists have estimated to be 23.7% over the last 12 months.

According to the government site, approximately 250,000 workers will receive a 17% increase from 1st April, and an additional 7% from 1st July. A one-off bonus of $1,400 will  be paid to workers in two instalments in November this year and in January next year.

The unions representing Building Supervisors and Sanitary Public Workers agreed on a higher wage increase of 33% and 30% respectively.

Labour unions and business leaders have been in talks with President Cristina Fernández de Kirchner and the cabinet throughout the week to agree on a deal that was in line with the unions’ expectations.

Francisco Gutiérrez, a member of the board of directors of the UOM metalworkers union, has today publicly praised the agreement reached with the government, calling it “realistic and objective”.

“This improvement responds to workers’ needs and on the other hand, we understand it was reached in a specific context of the country’s economic turbulence,” he added.

Talking to Radio Del Plata, Carlos Tomada, Argentine minister of labour, employment, and social security, went on to say that “this is very positive and happens in a moment when many young people are being incorporated to the metal industry.

“There has been a great rationality and a strong commitment to maintaining the purchasing power of wages, and at the same time, the sustainability of economic growth.”

Among the unions that agreed to the 24% hike were the AB banking Association, the Commerce Union, and the UOM Metals Workers Union.

After hitting a record high of $8.75 per US dollar, the “blue dollar” has fallen slightly to a rate of $8.35. The high reached on Wednesday marked a jump of $0.48 in one day.

The current official rate sits at $5.12, making a 63% disparity between the two markets.

The high mark of $8.75 nearly doubled the initial rate of $4.49 that appeared in October of 2011 after the government’s implementation of protectionist restrictions reduced the ability to obtain US dollar notes.

The spike in the blue dollar rate could have been a result of the recent increase from 15% to 20% of the levy applied to Argentine credit cards used abroad.

The unofficial rate has risen 24.2% in less than three months, compared to a 3.9% increase by the official rate, which started the year at $4.92 per US dollar.

According to local newspaper Infobae, Domestic Trade Secretary Guillermo Moreno proposed an “exchange holiday” for the weekend.

“Let banks, exchange houses, and brokers know that I do not want operations in the parallel market until Monday,” he allegedly told banker Alfredo Piano in a phone conversation. “And that the dollar cannot pass $8.50.”

The “holiday” would have resulted in a decrease in blue dollar transactions, bringing down its price to $8.35.

Brazilian president Dilma Rousseff promised to keep inflation under control and reduce the “Brazil cost” in a conference on Wednesday. She said that the nation, the sixth-largest economy in the world, has no other alternative if it wants to remain competitive.

“Brazil has unnecessary costs in its ports. We have to open them to the competition because the ports are part of the so-called ‘Brazil cost’,” Rousseff said.

She expressed plans to increase the amount of funding given toward infrastructure in 2013, a year that she said would be one of significant improvements in roads, airports, ports, trains, and ports.

“Our country has to change and change in a direction of better competitiveness,” she said.

Brazil’s economy was aided by many tax breaks in 2012 but only saw an improvement of roughly 1%.

Rousseff also said that she intends to take advantage of offshore oil reserves in Brazil, which are said to contain about 100 billion barrels of oil.

Officials from the main business chambers representing supermarkets stated today that the price freezes agreed on Monday have not affected food supplies.

Supermarkets sought to refute the information published in this morning’s Clarín newspaper, which announced the existence of food shortages due to the price agreements. “We have no information about shortages,” said the spokesman for the Argentine Chamber of Supermarkets, Fernando Aguirre. “We’re far from that. There are specific cases but you can’t talk about a general shortage, it’s only been two days [since the price agreement]” he added.

The executive director of United Supermarkets’ Association, Juan José Vasco Martínez, also denied rumors of shortages, indicating that “beyond some isolated problems (…) there is an excess of demand, internal consumption remains very strong and that exceeds the industry’s calculations.”

“In this sector we haven’t fell any of that, no one has complained, no one has said anything. We’ve had no impact,” said Yolanda Durán, speaking on behalf of Chinese supermarkets. “The agreement is recent, how could anyone think it’s had an impact already?” she added. Chinese supermarkets joined other supermarkets and electronic goods’ stores and ratified the agreement to freeze prices for two months yesterday.

The Undersecretary for Consumer Defence, María Lucila Pimpi, defended the idea that some supermarkets might implement restrictions on the number of items that can be purchased, to avoid speculation. “I don’t think it would be bad if supermarkets placed a reasonable limit to the purchase of products,” she said on a radio interview. Pimpi also denied rumors that Domestic Trade Secretary Guillermo Moreno had banned supermarkets from advertising special deals.

The controversy regarding an alleged food shortage was sparked by an article published today on the front cover of Clarín. The article states that supermarkets in Barracas and Tigre were out of certain products, such as sugar and vegetable oil, and that there were signs limiting purchases to a maximum of two items per family group.

The price freezes agreed upon by the supermarkets are the government’s latest effort to control rising inflation.

President Dilma Rousseff announced today the government’s plan to abolish the taxation of staple foods in Brazil in order to fight rising inflation.

Speaking to a local radio station in Paraná, Rousseff announced the latest in a series of wider tax cuts, which has already seen utility rates slashed in order to slow consumer price increases and increase competitiveness.

The government will now update the basket of goods law, which currently features 13 basic goods that are deemed essential for a Brazilian family to live off for a month. Rousseff said of the new plan that, “since the basic basket law is so old, we are updating the list of products so that we can eliminate all federal taxes on them.”

The list of 13 basic goods currently includes rice, bread, butter, and meat, whose prices rose approximately 10% in 2012. The new additions to the basket of goods law to be announced soon.

However, Rousseff noted in her interview that the tax cuts would only affect federal taxation, as attempts to convince state governments to scrap local taxes on staple foods have been unsuccessful.

The Brazilian government hopes these measures will kick-start the country’s stagnant economic growth and curb its rising inflation, which rose to 6.0% in January, exceeding the Central Bank’s target of 4.5%.

Yesterday, supermarkets in Argentina agreed to freeze prices for two months as the country attempts to tackle inflation that private estimates put at above 20%.

Domestic Trade Secretary Guillermo Moreno signed an agreement Monday to freeze prices at supermarkets at their 1st February level until the beginning of April. The agreement was made with the United Association of Supermarkets (ASU), whose members include Walmart, COTO, Disco, Carrefour, Día, Toledo and Disco.

This group represents 70% of the Argentine grocery market, according to the Associated Press. The Workers Cooperative of Bahía Blanca, though not an ASU member, will follow the price regulations as well. It is possible additional chains will participate in the freeze as well.

The prices will stay the same for all products in these supermarkets, with customers able to make a complaint by telephone if they notice any increases in prices.

Given Argentina’s current rate of inflation, officially measured at around 10% but widely believed to be much higher, the decision will prevent any further price hikes in supermarket goods for two months. A potential extension of the agreement may be discussed before it expires at the start of April.

The two-month price freeze comes just days after the International Monetary Fund (IMF) reprimanded Argentina for presenting unreliable inflation statistics. Argentina is set to begin using a new Consumer Price Index (IPC) the final quarter of 2013.

The measure also comes in the midst of annual salary negotiations, with the General Confederation of Labour (CGT) and the Argentine Workers’ Union (CTA) demanding a minimum salary increase of 25-30%, La Nación reports.

Last Friday the head of the International Monetary Fund (IMF), Christine Lagarde, issued a “vote of no confidence” against Argentina, giving the country until the 27^th of September to improve the quality of its statistics. The government has eight months to bring the statistical analysis of the Indec in line with IMF requirements. Statistics on inflation and growth have been under fire since government intervention at the Indec in 2007, eroding its credibility.

The Consumer Price Index (IPC) and Gross Domestic Product (GDP) indicators must be improved upon in the coming months if Argentina is to avoid further sanctions. According to the IMF, Argentina has failed to comply with article eight of its regulations. This article states that countries must provide a precise and truthful account of their finances, and failure to do so carries with it certain punishments. This is the first time that the IMF has had to censure one of its members for lack of confidence in its numbers.

The vote of no confidence is the first step in terms of exacting punishment on Argentina. IMF regulations stipulate that, moving forward, the next sanctions would be to refuse Argentina access to credit, suspend its vote, and finally, expulsion.

Discussions surrounding Argentina’s fate were marked by “harsh sentences” and “impatience” by representatives of many European countries. The IMF’s Brazilian representative looked set to pursue a policy of appeasement, but eventually backed down in the wake of fierce criticism directed at Argentina. One of the most persuasive arguments for the vote of no confidence was that “it’s not that Argentina can’t [provide reliable figures] rather that it doesn’t want to”.

Despite appearances to the contrary, the IMF views its decision as an opportunity for Argentina to rectify its mistakes, rather than an attack, and issued a statement which read: “The IMF is willing to continue to engage in a dialogue with the authorities in order to improve the quality of the official Consumer Price Index”.

Argentina’s government, on the other hand, has accused the IMF of not only making “another mistake”, but also of upholding a double standard. They referred to the fact that Argentina is “the same country that during the 90s the IMF presented as the best economic model”, which later ended in the country’s worst economic crisis.

In a press release issued by the Economy Ministry, Argentina announced plans to request an emergency meeting with the IMF’s board of governors to review the decision. The release went on to add that the IMF is the same fund that showed “complacency” with “inaccurate statements” and “failed policies” which, it postulates, led to the global economic crisis.

In response to last Friday’s sanctions, Economy Minister Hernán Lorenzino announced on Saturday plans for a new IPC. The current IPC only measures inflation for the province and city of Buenos Aires. The new one will be a national one, and as such will include statistics for the entire country. Lorenzino commented that, “a country as large as Argentina needs to have indices that better reflect what is happening in all of the country”. In addition, the new IPC originally set to debut in 2014, has been brought forward to take effect as of the last quarter of this year.

President Cristina Fernández de Kirchner addressed a number of issues this morning in her first public appearance in Argentina since returning from her diplomatic tour of the United Arab Emirates, Indonesia, and Vietnam.

Speaking from the Salon de Mujeres in the Casa Rosada, Fernández highlighted Argentina’s economic recovery despite the international financial crisis, and called for Argentines to “redouble efforts to continue growing” and “maintain job creation.”

“Every day, we have to add another brick”, she said, referring to the economy.

In a statement directed at union leaders who are currently in the midst of tense salary negotiations with employers, the head of state pointed at Europe, stating “26% unemployment in Spain should be a wake-up call for all of us […] Argentines, believe me, we are a fortunate country.”

She emphasised the need for unions and employers to tone down rhetoric and begin to seek common ground.

“It’s not a question of shouting, or arrogance, or force. It’s a matter of intelligence, wit, and coming to agreements to see how we can improve, how we can encourage the best use of things.”

The president also addressed inflation in the country, which was placed at 10.8% last week by the National Institute of Statistics and Censuses (INDEC), but privately estimated to fall somewhere around 25%. She targeted vendors that indiscriminately raise prices, specifically in coastal areas that have seen an influx of tourists in the summer months.

“I’m not going to use the word ‘boycott’, because when [former president] Néstor Kirchner used it there was a commotion,” she stated. “So let’s use the phrase ‘create a vacuum’ [of demand].

“If you don’t defend yourself, no one’s going to defend you”, she affirmed.

During this morning’s proceedings, Fernández signed agreements with provincial governors for the creation of 17,000 new homes, and destined $100ml for the renovation of the auditorium of the Instituto Saturnino Unzué in Mar del Plata, which will be named for the recently deceased actor and director Leonardo Favio.

The exchange rate on the dollar reached $7.51 last week. The official dollar remains at $4.96.

The “free” dollar started last week a bit lower by dropping three cents to $7.48 last Friday. This unofficial exchange rate opened today at $7.43, a drop in five cents to start the week. According to Infobae, the trend that set the maximum historical unofficial exchange rate has started to slowly reverse.

The official dollar has remained $4.96 in banks and exchange places in Buenos Aires. It is estimated that streamlining in the processing of the tax agency, AFIP, to authorise the purchase of foreign exchange for tourism caused the informal market price.

Economists consulted by Infobae assure that it is possible to get out of this monetary trap but the country will need to change monetary policy as well as address inflation issues. Economists also recommend that there should be a dollar “balance” above and below the official rate.