With the situation generated by high inflation (close to 3 digits), Debates about contemplating a new monetary regime are becoming more common. This is timely like irrelevant if strategies to comprehensively order the public sector are not implemented in unison. There are proposals ranging from dollarization to bimonetarianism. Now you need to add the proposal of a common currency with Brazil.
In the absence of money, it is not possible to stimulate private investment, nor the creation of quality jobs or economic growth. For his part, the rejection of our current monetary sign is a consequence of constant inflationalong with exchange controls in order to mitigate the flight of foreign currency.
In this regard, we can see that, according to data from the Ministry of Economy and the BCRA, between 2003 and 2022 total public sector expenditure was, on an annual average, 11% more than public revenue. Moreover, monetary issuance grew at an average annual rate of 34%. Y the average rate of inflation was 30% annually. This implies that the national public sector covered by effective income, in the last 2 decades, less than 90% of your expenses. This reveals the excesses of debt, on the one hand, and of the monetary question, on the other.
Chronic fiscal deficits have required the issuance of higher pesos than actually required. The current situation (with revenues covering only 80% of expenditure and monetary issuance and annual inflation of the order of 100%) is the expression of a process that began with the exit from convertibility in 2002 and which has steadily deteriorated in the following years.
The disorder in the pension system and the overlapping of taxes and expenditures between the three levels of government, it leads to spending above income and not properly managing this expenditure. The problem is not only in overspending, but also in the loss of economic and social productivity. This corrodes the currency. Therefore, any monetary regime will be doomed to fail. if tax bills are not in balance and public management has not improved dramatically.
Since it is not only a matter of deficit but also of management, traditional fiscal adjustments are not a solution. If we think of a new monetary regime, it is essential to order the state, at least, in terms:
1. Taxes (unification and simplification of taxes)
2. Order the distribution of government revenues at the federal level (replacing co-sharing with the distribution of tax sources among jurisdictions)
3. Functional ordering (excluding overlap of administrative structures and expenditures between jurisdictions)
4. Pension system (sustainability and equity)
5. Professionalisation of the public sector
For example, there is no change in the monetary regime that resolves the bias generated by applying taxes as gross income. It is essential to place this agreement high on the public policy agenda so that regime change is not frustrated again over time.
NS
Source: Clarin
