The government has decided to maintain the shock plan agreed with the International Monetary Fund, despite the final changes he had to introduce in his omnibus bill to get congressional approval. This involves the elimination of withholding taxes from regional economies, the exclusion of YPF from the privatization list and the application of a new pension mobility.
Negotiations with lawmakers and the CGT strike have raised doubts in the last few hours about the feasibility of the largest fiscal adjustment in 60 years. But, as far as he knew Clarion, The Minister of Economy, Luis Caputo, will continue with his roadmap to achieve a primary surplus at 2% of GDP in 2024. “The fiscal target is maintained”, They underlined from the wallet.
Under the Caputo plan, 40% of the fiscal recovery depends on whether Congress will consider the plan presented Monday to reverse workers’ wage relief, as well as tax changes and the suspension of asset mobility required by law. bus. The changes in the last case They changed more than 100 articles, but without altering their fiscal impact.
One of the main innovations is the elimination of withholding taxes for regional economies (without touching meat and fish) and the executive’s power to increase export duties. Already in the original project only 50% was taxed. Now, the new version would mean a loss of resources of less than 0.1% of GDP, saccording to calculations by ACM economist Francisco Ritorto.
The Government has maintained, against all odds, the remainder of the “tax”, which provides for an increase in export duties for the export of flour and soybean oil, 31% to 33%and raising the general rate to 15% for most goods exports. This point was fundamental, starting with withholdings They are not subject to co-participation and enter the Treasury.
The reformulation also provides for greater restrictions on money laundering (non-residents who have gone abroad cannot declare assets in the name of third parties and the proceeds will be allocated to the Central Bank) and the exclusion of many taxpayers from personal assets due to the rise in the floor, together with a less gradual reduction in tariffs for those reached.
On the expenditure front, the proposal is to maintain “the quarterly adjustment that corresponds to all pensioners in March, respecting the current formula” and, “starting from April, a automatic monthly inflation update based on the latest inflation data available from INDEC“, which according to the text “guarantees pensioners the maintenance of their purchasing power”.
The project would have a double impact. On the one hand, salaries will be updated in March for wages and tax collections that go to Social Security for October, November and December. “The fiscal impact would be very good, for pensioners it would be terrible, “This quarter they adjust for past inflation (close to 25%) and they expect inflation of 75%,” said economist Oscar Cetrángolo.
On the other hand, the next increase will be based on the CPI corresponding to February (data known in mid-March). Since the official bet is that inflation will fall due to the recession, the adjustments would be smaller than they would have corresponded to the formula in force from 2021. But also, the month of January would not be taken into account and it is not clear whether the bonuses will be maintained.
Therefore, with an expected 3% decline in activity in 2024, PxQ estimates that pension spending would increase it would reduce 0.9% of GDP, double what Caputo expected. “There is a serious issue on the pension issue, inflation at 80% and the update to 25% is unacceptable, it makes pensioners pay for the loss of income due to the failure to increase withholdings”, stated the Alem Foundation, of the UCR.
The government agreed with the IMF to make a larger adjustment than the organization requested, but still did not receive the promised disbursements to pay off the debt. In December, primary spending fell 6% year-on-year in real terms due to increases in benefits and pensions below inflation, but the the deficit increased by 30% due to increased subsidies and declining revenues.
Source: Clarin
