On August 5, the Chamber of Deputies passed the 2020 budget extension bill and enacted the local law public debt sustainability initiative, both driven by the Executive branch.

The approval of the budget extension, which aims to reallocate items to mitigate the impact of the COVID-19 pandemic and its economic and social consequences, received 229 votes in favour, 9 against and 16 abstentions. The text must now be discussed by the Senate before becoming law.

One of the most controversial articles was the one levying VAT of 10.5% on fluid and powdered milk without additives, which had formerly been exempt. Following criticism from the opposition, the Frente de Todos bloc and the Minister of Economy, Martín Guzmán, decided to eliminate this section with a view to achieving consensus.

In other news, the debt sustainability bill became law with 247 votes in favor, 2 against and 1 abstention. The idea is for local law bonds to be negotiated under the same conditions as foreign law bonds and establishes that holders of eligible securities who fail to adhere to the swap will continue with their deferred payments until December 31, 2021.