After Luis Caputo’s announcement, Clarion He consulted some economists to try to glimpse how the path will continue to reach, in the same way, the objective of fiscal balance that the Minister of Economy promised to achieve last night.
For Fernando Marull, “it is impossible to compensate for the loss of income caused by the elimination of the tax chapter. 1.8% of GDP remains outside. Looks like someone will have to adapt more. Another reading is that they didn’t have the votes.”
“My guess is that they will come up with a new package, offset the spending on the other side and raise more taxes. They will have to present something new, but it is not yet clear, ”she says. Fausto Spotorno. “By withdrawing these measures, the package which represents an adjustment of five points of GDP would be less than one and a half points. With which for now we would have an adjustment of 3.5 points, sufficient to reach a primary balance, slightly primary surplus, which It still represents great progress, but the two-point primary surplus target agreed with the IMF will require some additional measures.
Matías Surt, of the consultancy firm Invecq. “There are aspects of the fiscal package that have been quite underestimated, especially the adjustment of pensions and pensions. I believe that if this is not changed and the current formula is maintained, with the inflation we will have it will be possible to adjust more than one point of the GDP, I would say almost a point and a half, when they put 0.4% in the tax table, with the PAIS can be collected just over 0.8%. Fiscal adjustment will become something more rustic than it already was and will rely more on the liquefaction of some spending items. The problem is that it will work in the coming months, as well as the fact that it will generate greater social and political tension due to the liquefaction of all that spending. It is unsustainable because if at some point inflation starts to fall, this adjustment will be reversed, especially because pensions will start to rise again. And sooner or later they will have to discuss the reform of the law on mobility and if it is difficult for them today, I don’t know if in four or six months it will be easier”.
Salvatore Vitelli He underlines that this “adds weakness to public finances. There will be uncertainty among investors on Monday regarding fiscal convergence, which is everything for the economic agenda. We should no longer think of a financial deficit of zero but of a primary deficit of zero and at the same time we should compensate for these items that are lost with greater discretionary adjustments, such as transfers to the provinces. The adjustment will now come from something more discretionary than something legislated as intended. This also reflects a political weakness, because the adjustment made by decree adds tension because it does not have the backing of Congressional support. The priority they are aiming for is the approval of the law, but in the end this concession of the entire fiscal package adds weakness to all public accounts”.
For his part, Gabriel Caamaño Gómez He ruled that the government must back down because the situation has become very complicated with governors and legislators. “He had to withdraw this part so as not to end up giving up a lot or accepting defeat in Congress.
— How do you imagine recovering what you have given up now?
— You’re saying you’re going to adjust more spending, but the truth is that the provinces don’t have much to put up with because what they can adjust was already in the adjustment package. The government will have to adjust national enforcement costs. It is also clear that reducing spending is slower than increasing taxes. As a result, the fiscal front will advance more slowly. We will see how he will make the Provinces pay part of the costs
Source: Clarin
