New Economy Minister Silvina Batakis said this Monday that Argentina will maintain the goals agreed with the International Monetary Fund (IMF), which includes reducing the fiscal deficit to 2.5% of Gross Domestic Product (GDP). (11th)
At his first press conference a week after taking office, Batakis said, “The targets agreed with the IMF are preserved. This is an agreement we signed as a state and we must fulfill.” said.
This year Argentina signed an agreement with the IMF to expand resources of approximately US$44.5 billion, replacing the stand-by loan instrument signed by the previous Mauricio Macri government (2015-19).
The new agreement aims to reduce the fiscal deficit from 3% of GDP last year to 2.5% in 2022; 1.9% in 2023; and 0.9% in 2024.
In his statements, the Minister emphasized that after the economic emergency caused by the Covid-19 pandemic is overcome, the primary goal of his administration is to “ensure order and balance in public finances”.
He argued that the public sector should use the deficits as a tool against the conjuncture, but that the axis of balance should be restored after the turmoil.
“We’re not going to spend more than we have,” he stressed.
Argentina’s economy contracted by 9.9% in 2020 and rose by 10.3% in 2021. The IMF calculates that the country’s economy will grow by 4% this year.
– Tariffs and inflation – Segmentation of gas and electricity tariffs will be adopted in order to reduce subsidies for energy consumption in order to achieve fiscal balance.
From Friday (15) a user registration will be opened to maintain full subsidies for only the most disadvantaged sectors. According to the ministry’s plan, the middle classes will receive a partial subsidy and the richest will pay full wages.
In 2021, energy subsidies totaled US$11 billion, or 2.3% of GDP.
Batakis said the inflation, which is estimated at 52% for this year and is one of the highest in the world, was calculated before the start of the war in Ukraine, a conflict that affects prices worldwide.
Noting that he revised a new forecast, the minister said, “The agreement (with the IMF) was signed before the increase in world inflation.”
“One methodological issue we are considering is not deviation from purpose,” he added.
According to a survey of expectations conducted by the Central Bank of Argentina, it is posting an annual inflation of 60% through May 2022 and is expected to close the year at 76%.
“We are working with businessmen and traders on inflation expectations. We are in a completely different situation than inflation forecasts can be made,” he said.
Batakis replaced Martín Guzmán, the architect of Argentina’s external debt restructuring, who unexpectedly resigned on July 2.
source: Noticias
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