In order to reach the goal, MegaQM says that you have to compute 0.3 points of accounting profits for the subscription of CER bonds which generates accounting profits and at the same time saves 0.7 GDP points in the second semester. For the consultant, this is equivalent to $610,558 million. “Expressed in terms of spending, it is required to lower the absolute level by 6% compared to what was expected for the second semester”, states the report.
For MegaQM, the focus would be on the elimination of subsidies, but “given the lateness of the year and the time it takes to implement these changes, it might not be enough”. The rest could come from transfers to provinces or capital spending,” he notes.
The estimates of the mutual fund manager largely coincide with the view that the economist of the Latin American Economic Research Foundation (FIEL), Cynthia Moskovitz.
In a report he made for the FIEL Situation Indicators magazine, the economist estimates that the deficit for the first half of the year was 3.1% and points out that the items that explain the net rise in spending are social security (+0.5% of GDP), promotion and social assistance (+0.3% of GDP) and education and culture (+0.2% of GDP), as items such as health and work show reductions. “Regarding economic services, basically the entire increase is due to that of energy subsidies (+0.4% of GDP)”, explains Moskovitz.
The FIEL professional warns that there is an accumulation of arrears in payments by the Treasury that affects the result going forward. “According to the latest available data, the National Administration’s demandable debt reached, at the end of June, $836,309 million, that is, 1.1% of GDP”, warns. In this sense, it highlights that “at the end of 2021, the accumulated unrealized payments amounted to 0.1% of GDP.” That is why he states that this accumulation of commitments complicates the cash goal.
The economist points out that part of the cuts would come from the increase in rates. “The latest announcements regarding the rates indicate that, according to official estimates, the new measures would save some $500 billion in subsidies on an annualized basis,” she explained. As she considers that we have to wait for the implementation and the worst of winter is already over it is “unlikely that, by this means, this year, more than 0.2% of GDP will be saved”. So, for Moskovitz, “the investment, the wage arrears, the delay in adjustments in social benefits due to the acceleration of inflation are available, although they are partially offset by bonuses, some already announced, others likely to be implemented.” In the case of a cut in investment, it would contribute 1% of GDP, the economist points out, taking into account the last 5 months of the year.
Source: Ambito
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