In four months the Budget what Martín Guzmán thought for 2021 it doesn’t exist anymore. Inflation will not be 29%, soybeans are not worth US $ 350 and social, union and partisan pressures in the face of the elections are greater than those foreseen by the minister.
On the one hand, Guzmán has more collectionIn part this is thanks to accelerating inflation. Tax revenues (grew 105% annually in April) ‘fly’ hand in hand with the rise in prices, the recovery of activity and the higher price of grains. On the side of spending, the minister plays go-go and lets the pensions and wages rise less than inflation: in the first 3 months social benefits increased only 32.4%. A full-fledged fit.
The combination of more collection and a tie-up expense opens up space for subsidies put the diagonal: they go up to 70% per year. And there is no IFE or ATP.
What happens then?
Guzmán predicted $ 627,000 million (1.7% of GDP) for subsidies this year. But economists who are experts in fiscal and energy issues believe that the figure will be higher because the rate increases will not be what the minister had planned to do (between 30% and 40%). “If the increases are what Federico Basualdo and Federico Bernal say, the subsidies shoot up to $ 905,000 million”, says Alejandro Einstoss, an economist at the UBA and the Argentine Institute of Energy Mosconi.
For Ricardo Delgado, director of the consulting firm Analytica, if the discussion refers only to the issue of light raised by Basualdo, “It covers a figure that goes between $ 54,421 million and $ 38,872 million of extra subsidies to what Guzmán budgeted”.
None of these figures is relevant from a macroeconomic point of view. But they do give oxygen to La Cámpora in the face of elections when inflation does not give way. Even subsidies could go up higher.
Nicolás Gadano, economist and expert in energy and public finance, warns of this. “If he dollar it moves, everything changes there “. Subsidies increase at the rate of the exchange rate.
There is more to the background fight. Guzmán, for a few months and privately, admits that delaying corrections in the energy sector is risky for those who have to assume those adjustments in the future. And it could be the ruling party itself (that is, him). A ball of delays in rates is formed at the cost of the State increasingly financing the energy consumption of homes as happened before with Kirchnerism.
Second, the minister says that if the sector does not invest and increases the imports fuel, there will be less Dollars to repay the debt in the coming years and finance the recovery.
“The Guzmán Budget had several blows and one of them will be that the subsidies will not grow in terms of GDP”, says Gabriel Caamaño, director of the consulting firm Ledesma. “But the fiscal goal is still achievable because the fiscal aid for the pandemic is not much and soy increased. We will have to see in May “.
Marina Dal Poggetto, director of Eco Go, also thinks that the Guzmán-Basualdo affair “It is absurd in fiscal terms, it is not relevant. But yes in political terms and in the face of the discussion with the IMF “. The organism does not look favorably on dissent within the government on the direction of specific issues on spending on subsidies. He also closely follows the intervention of the governor, Axel Kicillof, in matters of Guzmán’s agenda. Kicillof praised Basualdo.
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