“The point is that if they continue to spend as they did in March, your savings will drop,” explained Mariano Devita, an analyst at the Research Institute for Argentine and Latin American Reality (IERAL), belonging to the Mediterranean Foundation, to Ámbito Financiero. .
Devita states that “accountably, if spending goes up, in your economy you are indebting yourself to the rest of the world, if it grows above what the country produces.”
In March, the government was able to demonstrate overachievement of the goals of the program agreed with the Fund. It was almost $193,000 million against the $222,000 million scheduled. To this end, the Palacio de Hacienda recorded $144,000 million as current income under the Property Income item, which would be the result of the difference between the effective and nominal value awarded in the debt tenders in Treasury pesos, generated in the reopenings with cut price above par, as explained in a recent report by the consulting firm Equilibra.
“This creative accounting on time in March they can present it. I don’t know if the IMF is going to allow it. I think they are going to start asking him to develop what property income is,’” Devita stated.
The risk is that the upward trend in disbursements continues, as happened last month, it will not be possible to reach the end of 2022 with an internal savings rate of 17.4% and an investment rate of 16.9%, with a current account surplus of US$4 billion, according to the IMF’s own numbers, explained the IERAL economist. Devita warns that although the first revision would pass, the Fund’s mission is likely to put pressure on the government to reduce spending. Meanwhile, for the Palacio de Hacienda it can be part of the “recalibration” of the program.
The report of the Fundación Mediterránea business school underlines that “shortly after, the first yellow lightss traffic light that monitors compliance with the goals committed to the IMF.
In this regard, it warns that “at the accounting level, the positive current account arises from exports of goods and services that exceed imports, but, In economic terms, this surplus depends on total domestic savings being above the investment rate”. “Although by ‘creative accounting’ a fiscal deficit is communicated within the goals, if there is excess public spending, lower savings and exchange delay, the macroeconomic consequences cannot be avoided,” warns the report, which says that in this scenario the Central Bank will not be able to add international reserves.
For its part, Equilibra, the consulting firm run by Martín Rapetti and Diego Bossio, points out that the extraordinary social benefits announced by the government after knowing the inflation data for March, would have a fiscal cost of $260,000 million in the second quarter of the year, equivalent to 0.4 points of GDP. As for the consultant there is no margin for higher collection or to cut other expenses, it would raise the deficit from 2.5% to 2.8% of GDP, with the risk that if the Fund disavows “creative accounting”, it would rise to 3 %.
Source: Ambito
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