Martin Guzman, Minister of Economy
In the last few days, two Kirchnerist hard wing initiatives have come to light to pour more money into the street.
One is the project Basic salary universal presented last Tuesday. One, announced last week, a pension moratorium for those who do not have the contribution years required to collect retirement.
That was estimated by a calculation by consulting firm Analytica the fiscal cost of both measures assumes an additional increase in spending of $ 2 trillion per year, equivalent to 2.66% of GDP.
To give an idea of what value means, there are two comparisons:
– is equal to the promise of fiscal deficit signed by Minister Martín Guzmán with the IMF for this year,
– equal to the amount spent by the government on subsidies over almost two years.
– main three social programs which is the food card, the development plan and the job promotion, consumes 0.66% of GDP per year.
Said in Creole: the Kirchnerist proposal not only contradicts the agreement signed with the organization but also goes in the other direction of what Guzmán is looking for because will double the current financial imbalance.
None of the aforementioned proposals were consulted with the Ministry of Economy. Since they are not seen in the program with the IMF, almost unable to find support from the economic team.
These days, there have been interactions between the Palacio de Hacienda and the Fund staff due to the revision of the program and the June payment.
The work of Analytica was made on the basis of the following calculations: – The proposal of the representatives presented on Tuesday in the Delia Parodi Chamber of Deputies is equivalent to additional public spending of 2.4% of GDP. This includes paying an amount equivalent to a basic food basket (about $ 15,500 in July) to 8,900,000 beneficiaries (those registered in IFE 1). From the number of beneficiaries, for every million extra people receiving the benefit, 0.26% of GDP is added to spending in a year.
-In the case of the pension moratorium, about 800,000 people are eligible for retirement. Analytica estimates that there will be approximately 300,000 recipients this year. This means an additional 0.13% of GDP. The other 500,000 will add 0.2% more.
If you add each part of the exercise, at least a year, you have 2.4% + 0.13% equals the effect of 2.53% of GDP. “This in silver is $ 2 billion, not feasible for Argentina’s economy”summarizes Ricardo Delgado, head of Analytica.
Kirchnerism also encouraged and suggested measures that would have no financial impact. For example, the promotion of minimum wage or parity. It is another thing to protect income from inflation and not draw additional resources.
The economy endorsed the idea. On his Twitter account on Friday, he featured as one of the “5 good news of the week” the Government will promote the increase in the minimum, vital and mobile wage.
There are other steps in that line.
“In the financial area, it has been confirmed that the increase in income for retirees, low -level monotributors and informal workers will reach 13.6 million people, including 6.1 million retirees, and will require $ 206 billion (0.3% of GDP). “, indicates a document this Friday from Delphos consultancy. Also, Sergio Massa activated measures to raise the Income floor to approximately $ 265,000 from the current $ 225,937 in June and the increase in the minimum vital and mobile salary was brought to a 17% increase in June and 5 % in August.
To be understood, Kirchnerism intensified the blows against the minister through two means: the declarations and the pretense of further expanding public spending.
That was said by Andrés Larroque, minister in the government of Axel Kicillof “No one voted for minister”. Cristina Kirchner then criticized inflation and said it was not enough for workers to get out of poverty.
Finally, Kirchnerism also pressured the minister by setting the economic agenda from Congress. Not only on measures to protect workers from price increases, but also bills to raise the level of public spending. Clearly crack against fiscal consolidation and Guzmán.
“All of these measures are aimed at improving the income of workers, retirees and beneficiaries of social plans, but it is more complicated to achieve the financial goal, which is further demanded by the increase in energy subsidies. surprisingly the issue of finance to help the Treasury has been reactivated, adding another $ 86,500 million ”, Delphos said. “In total, 41% of the withdrawals allowed by the IMF agreement have been exhausted, about $ 705.2 billion, a limit that is likely to increase to $ 740,000 simply because of the impact of higher inflation”. According to this consultant, inflation by the end of the year could reach 75%.
Source: Clarin
