The other measure is the unification of a system of single accounts, where all disbursements come out of the same “central box”. This, Batakis anticipated, could generate savings of $600 billion, due to the different surpluses that decentralized organizations may have, such as a trust fund. For that, an article of the Financial Administration Law must be modified. “I am a person who believes in fiscal balance,” said Batakis.
In a dialogue with Ámbito, Nadin Argañaraz, director of the Argentine Institute of Fiscal Analysis (IARAF), explained the consequences of the measures: “The implementation of budget quotas based on available cash can eliminate the deficit while that is in force”. It means that no more expense can be accrued than the income that comes from the collection. “It could imply a de facto balance between income and expenses,” he clarified. To determine the budget quotas, he considered that the Ministry of Finance should set short, quarterly projections, based on the expected flow of income.
Although he assured that what was announced marks “clear signals” by Batakis, he anticipated that the greatest challenge will be how the scheme is implemented. “There is going to be a logical bid from the different ministries to have more cash, therefore more spending capacity, each ministry will want to position its task”, he explained. Based on similar measures taken in the past, he estimated that in the implementation the cut could go through public works or energy subsidies, which is the expense that grew the most in the year.
In any case, Batakis’ announcement states that the budget quotas will be adjusted, that is, what he is “enabled” to spend, but not what those quotas will be like. In addition, there are expenses that cannot be cut, such as pensions or salaries. “The pension expenses are modified by the Mobility Law, so they are already established, and if not they should modify the law”, he explained. “The guarantee for its political viability will be that it does not imply more efforts for the most vulnerable social sectors”he added.
Meanwhile, Oscar Cetrángolo, professor of public finance at the UBA, estimated that the announced measures can “accompany” a drop in the fiscal deficit, but should be inserted with the announcement of a fiscal program, due to the “rigidity” that it has. the Argentine budget in its expenses, such as the pension, the main outlay of the public administration. Among the aspects to take into account, he explained that one of the points to highlight is that if accrued expenses are not paid, floating debt could be generated, another point that is established in the agreement with the IMF.
Regarding the $600 billion surplus generated by the unification of the savings banks of an account system, Cetrangoló anticipated: “In the short term it can help, but in the medium term it turns against, if surpluses are taken from other organizations, at some point they have to be returnedbecause the law establishes it, and because it can generate political problems with the areas from which it is taken”.
Along the same lines, Nicolás Gadano, who went through the Treasury Secretariat, where the fine print of what was announced will be defined, assured: “Controlling cash expenditures can help meet a goal with the IMF, but it does not solve the deficit problem. The expense that accrues and is not paid, or is executed and is not even accrued, is more debt and payments in the future. The macro crisis is not resolved with a treasury approach”, he wrote on twitter.
Source: Ambito
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