Squeezed by the crisis, the government promises to adjust public spending

After a week of strong market instability after the resignation of Martín Guzmán, the government hit a detour this Monday with the announcement of a fiscal austerity package to avoid write-downs. Measurements include Spending controls, staff freezing and reduction of subsidiesa signal intended to calm distrust in banks, together with inflationary pressures and expectations of devaluation.

“We must give a certain order and balance to the public finances of the nation state. The measures that I will announce have to do with guaranteeing the fiscal balance”, Economy Minister Silvina Batakis said in the morning, accompanied by the Cabinet Economy team. , in his first press conference at the Palacio de Hacienda since he took office last Monday and before the transfer conference.

The registered blue dollar his first fall in four days and it dropped to $ 268; financial dollars slowed their rise to close below $ 300 and the Central Bank was able to buy reserves for the first time in July, taking over $ 80 million. Pesos stocks, on the other hand, rose as much as 7%, but stocks and dollar bonds fell again.

With a strong fiscal content, Batakis announced that the resources allocated by Economics to the national administration will adapt to the projection of the royal box. “We will not spend more than what we have” he stated in what he reminded Domingo Cavallo when he announced the zero deficit at the end of the De la Rúa government.

Batakis anticipated a reform of the law on financial administration centralize surpluses in a single account of up to $ 600 billiontogether with the extension of the “staff lockdown” to all state bodies.

The government tried shore up to the minister in full financial crisis and from Kirchnerism corresponded with silence to the fiscal measures. Because of the financial tsunami they give Batakis what they denied Guzmán.

Batakis presented the changes flanked by the Minister of Productive Development, Daniel Scioli, the Minister of Agriculture, Julián Domínguez, the head of the Central Bank, Miguel Pesce, his AFIP counterpart, Mercedes Marcó del Pont, and the Minister of Tourism , Matías Lammens. .

The head of the Treasury “tensions” recognized in the economy, which he will manage together with the economic team and companies, and ratified the program agreed with the IMF, after the agency went out last week to ask “painful actions”. “We plan to hit the targets,” Batakis said, denying that a deviation from predicted inflation implies a default. Analysts expect more than 76% per year.

Given the wave of price tags and the lack of stock of some products, the official announced that the National Competition Authority will be regulated. “We cannot allow price abuse”, held. A message that has been read as an “adjustment” by the social movements, for which they will go to the Plaza de Mayo on Thursday to ask for a $ 20,000 bonus and the updating of social plans due to inflation.

On the financial front, the head of the economy confirmed the creation of an advisory committee to assess sovereign debt in pesos, guaranteed rates above inflation and the continuation of the placement plan, excluding a “default”. The goal is to support the debt auction this Wednesday, for which the Central Bank will offer “insurance” so that individuals can sell it Treasury bills.

Batakis defined the measures on Sunday morning with the economic team and, subsequently, in an afternoon meeting in Olivos with the president. “I want all markets to understand that Argentina is willing to do what Batakis said this morning: control government spending.start a process of reducing the fiscal deficit and at the same time give a clear signal that the dollar is the right value, “Fernández said on Monday afternoon.

Fernández made these statements during the tour of the planned resurfacing works on Avenida 7 of the Berazategui district in Buenos Aires together with Minister Gabriel Katopodis.

The announcements of Batakis also contemplated the ratification of the tariff segmentation that Guzmán has agreed with the IMF, including the formalization this Friday of the form to keep these transfers, together with the migration of the tax agency for real estate valuations to the Ministry of Economy to homogenize the calculation for the payment of personal property, which today defines each province.

The Executive therefore seeks to fulfill the primary deficit of 2.5% in 2022. Until May, it accumulates 0.76%, but a significant jump is expected from June.