It should be noted that there is still the appointment of the Secretary of Economic Policy, in practice the Vice Minister. Precisely one of the criticisms that were heard was that his team “does not have a macroeconomist”. Although perhaps the head of the Palacio de Hacienda already has him in pectore since he anticipates that this Thursday he will announce more members of his team.
He agrees that the gaze is on the high fiscal deficit Massa instructed the Secretary of the Treasury (Raúl Rigo) that the balance of advances will not be used to finance the Treasury and, moreover, specified that on Monday 10,000 million pesos will be returned to the Central Bank for this concept, a process that will continue in the future.
“Basically what we are going to do is not ask for more money from the BCRA to finance the treasury. We are going to fix ourselves with resources that we collect and with financing from the private sector,” synthesized In other words, either significant financing will be obtained from the private sector or the adjustment of public accounts will be significant.
In response to a query Ambit on how the government will cut public spending, given this strong restriction on financing, the minister replied that work will be done with the central and decentralized administrations and the provinces on a scheme for setting priorities in terms of expenditures for the third and fourth quarters.
Specifically, he explained: “When we look at the consolidated public sector, central and decentralized administration, the number is lower compared to the overflow of spending in the first semester, and we are going to carry out joint work with the entire central and decentralized administration and also with all the provinces, a fixing scheme of priorities. We have a plan and I would not like coordinated work in each of the public administration sectors find out through the media how we have to organize and plan the third and fourth quarters”.
In this way, he avoided giving a percentage estimate of the cut to be carried out. “He will surely apply all his political capacity to negotiate the cuts”, those who know him explain. It is that both the governors and the different ministers come from having large incomes. “There is no awareness that spending cannot be financed” specialists explain. This will be perhaps the biggest battle that the minister will have to face not only with state actors but also, as he said, with Parliament.
In addition, Massa ratified the goal of 2.5% of GDP for the year’s primary deficit from which there is not much room for the State to avoid making a severe cut in spending.
Regarding private financing and due to the important maturity in pesos for the coming months, the minister anticipated that “To provide greater predictability and clear up uncertainty, we have launched a voluntary swap for maturities in pesos in the next 90 days. It will end on Tuesday and we already have adherence commitments of more than 60%”.
subsidies
In matters of energy subsidiesthe minister announced that they will be conditioned to a certain level of consumption, not only for a budgetary issue, but also to take care of resources.
He specified that in electricity, up to 400 kilowatts will be subsidized, reaching 80% of users but only 50% of total residential consumption.
In the case of gas the removal of the subsidy will continue in the same logic based on climatic differences and distribution cost but also respecting the seasonality of our various regions of our country.
In water, the application of the removal by segmentation begins in the month of September. These measures, according to the specialists, will imply a strong tariff increase It will also be faster to implement.
Bookings
Regarding the policy of strengthening reserves, he specified that in recent days steps have been taken that culminated in a “commitment” of export sectors of the value chains of fishing, agriculture, mining and others that give it the “certainty” to the government that a total of 5 billion dollars will enter in the next 60 days.
The minister also reported “situations of abuse by companies through a triangulation mechanism with their export billing and import overbilling.” In this regard, he announced that he is going to a registry for 60 days so that they rectify their position before Customs, “perhaps understanding that, perhaps they simply made a mistake.”
It’s about more than 13 thousand operations of 722 companies who bought products at a price, passed it through another destination, and brought it overcharged to Argentina, he stressed. After 60 days, the pertinent complaints will be made in the Argentine Justice of those cases that are not presented to clarify or rectify. And the complaint will also be made in the US laundering unit for money laundering
Asked about the topic retentions to the fieldsaid that “we agreed with the Secretary Bahillo who is our Secretary of Agriculture, a call to the sector to get to workr”. And he added “let’s not put conditions before ourselves when we sit down for dialogue. We are going to sit down and work with the sector”.
Devaluation and inflation
“We are going to work side by side with the BCRA to somehow guarantee that there are different instruments and policies that allow us to reduce the gap” between the official dollar and the alternative ones, the minister specified.
In his responses to the press, he ruled out a macro devaluation noting: “I want to say it clearly: the only thing that devaluation shocks produce is poverty and an enormous transfer of resources”.
Instead, he spoke in favor of export incentives, such as the extension of the term of the resolution established by the BCRA favoring the liquidation of agricultural currency.
Regarding inflation, he said that his team’s obligation is to “give answers”, but warned that it is not possible to give them “in a day or two, there is no magic, there are no situations that are resolved by a magic pass, and those who say that are lying.”
After stating that “inflation is one of the central issues to combat” he specified that “the month that ended and the month that begins, as a result of the difficulties we face as a country and as a government, they are going to be the two most difficult months in terms of inflation and from there we are going to go through a curve to reduce, based on the measures we are taking and others”.
social plans
Massa also explained that a mechanism will be enabled by which those who they have a social plan and join a company, keep the plan as a base for one yearthe employer pays the difference of the salary of the agreement plus the ART and the social work.
After a year, the worker will have to choose whether to stay at work or return to the plan, understanding that “have the benefit of registered work with social work and the right to retirement It is going to be that this bridge that the worker who is in a program today crosses somehow feels sheltered to keep the job.”
aids
Given that inflation is affecting the purchasing power of the majority of the population, the minister anticipated that on August 10 the the retirement mobility index, but with a reinforcement that helps retirees overcome the damage caused by inflation.
Likewise, for the private sector, next week it will convene a meeting between business entities with the purpose of finding a “a mechanism that allows the recovery of income of workers in the private sector that in cases of those who earn between 50,000 and 150,000 pesos”, affirmed Massa, and a re-study of the family allowance system will be carried out.
tax discipline
ANDn summary, the announcements have fiscal discipline as their axis, although with some announcements that could give a contrary signal, such as, for example, the reinforcement of the passive sector or that it has been determined that it has been reversed with the reduction of ministries. Also, it does not help that the minister did not specify how fiscal austerity will be carried out within the State.
But on the other hand, it ratifies the goal of 2.5% of the fiscal deficit for the year and the commitment to continue with the agreement with the IMF with which the minister spoke this Wednesday.
With the intention that the BCRA can meet the demand for foreign exchange, Massa asserted that he has as objective to reinforce reserves with mechanisms such as: advancement of exports with the value chains of fishing, agriculture, mining and other sectors with an estimated foreign exchange income of US$ 5,000 in the next 60 days.
Likewise, they requested the disbursement of USD 1,200 million dollars with international organizations for current programs and those under study. Precisely the delay of these disbursements was one of the criticisms of the management of Gustavo Belize.
Also, Massa anticipated that “they are evaluating four REPO offers with 3 international financial institutions and a sovereign fund” and that a decision will be made in the coming weeks, but he did not give more details. It should be noted that REPOs have the drawback of having a high interest rate.
Source: Ambito
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