In this regard, and while it is expected to define who will occupy the position of Deputy Minister of Economy, it was learned that the economist Gabriel Rubstein – postulated for the position – continues in dialogue with the new minister. According to those who frequent him, the economist is of the thought that The conditions for a sudden jump in the exchange rate are not given.
One of the first measures announced by Massa to promote fiscal regulation was the decision not to request Temporary Advances in the remainder of 2022. In this way, by closing the issue of the Central Bank, it limited the margins for public spending and forced to show results in the fiscal field that allow to ensure the refinancing in pesos of the Treasury.
The inflationary acceleration that has been registered will play in favor of the containment of expenses that are not indexed. However, to comply with the fiscal order, the new minister will have to adopt measures that are politically difficult to digest, such as containing wage bills in the public sector and advancing in raising tariffs to reduce subsidies.
It should be remembered that last week the Secretary of the Treasury, Raul Riggo held meetings with those who manage the resources of each ministry. To achieve the goal set by Massa, the portfolios must adhere strictly to what is assigned. There are areas where budget under-execution is noticeable, but this does not mean that it will have unused resources.
In any case, Massa in the cabinet meeting anticipated that the austerity of spending will be a necessary condition, similar concepts that he had also said Silvina Batakis. On that occasion, as now, the ministers agree with the diagnosis, but, in the economic team, they sense that austerity is not easy to impose. And, it will be more difficult to apply it with the governors.
More spending than in pandemic
Massa will try to limit public spending at a particularly difficult time. Primary spending in the first semester reached the fourth highest value in real terms in the last 30 years, even above 2020, when the economy suffered the impact of the pandemicaccording to a report by the consultancy Ecolatina.
During the first half of the year, primary spending grew 11% in real termssurpassing the good performance of income (which rose 10% above inflation).
The expansion of economic subsidies and social benefits explain the bulk (70%) of the growth in spending. In relation to subsidies, the rise in energy prices derived from the war between Russia and Ukraine, as well as the delay in the tariff reformulation, had an impact. Consequently, real growth in subsidies was 20% year-on-year.
As for social spending, a real growth of 10% is observed, also in year-on-year terms, explained by the application of the mobility formula and the reinforcement of income.
Contrary to what happens historically, when spending tends to increase in the second half of the year, now primary expenditures should be reduced in real terms between July and December compared to 2021. Ecolatina’s calculations show that there should be a fall a drop of 8% against the real average of the last 10 years.
One of the first measures announced by Massa to promote fiscal regulation was the decision not to request Temporary Advances in the remainder of 2022. In this way, by closing the issue of the Central Bank, it limited the margins for public spending and forced to show results in the fiscal field that allow to ensure the refinancing in pesos of the Treasury.
The inflationary acceleration that has been registered will play in favor of the containment of expenses that are not indexed. However, to comply with the tax code, The new minister will have to adopt measures that are politically difficult to digest, such as containing the wage bill in the public sector and advancing in the rate hike to reduce subsidies.
Source: Ambito
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