If the Government maintains the cut in spending that it has been showing so far this year, it will end 2023 in the order of $32 trillion, which it involves the second lowest level since 2017, only surpassed by that of 2019 at the end of the government of Mauricio Macri. This is highlighted in a report by the Argentine Institute of Fiscal Analysis (IARAF). The entity headed by the economist Nadín Argañaraz, proposes that by 2024 the Government that takes office on December 10 will find itself with adjusted spending.
The report raises the prospect of how much per capita spending should fall in June this year, to reach the objective that is set with the International Monetary Fund (IMF), taking into account the growth of the population. “The real drop that would be evident between 2017 and 2023 would be 16%. Per capita spending would go from $820,000 in 2017 to $690,000 in 2023”, indicates the private study. The work analyzes the behavior of 15 components, of which 12 would drop this year, if the current rate of adjustment is maintained, and only 3 would rise. If only those that decrease are taken, the drop per person is 26% in the last seven years.
The IARAF maintains that “if only the possible year 2023 is analyzed as a basis for the proposals of the candidates, the recent film of the last years is lost.”
Massa, in fact, is not doing badly taking into account the pressures he is receiving from the Monetary Fund to meet the goals of the fiscal deficit. In any case, the problem comes from the side of the collapse of income due to the effect of the drought. According to the study, real spending would have two stages of reduction, one from 2017 to 2019 and another from 2020 to 2023. This year spending could reach a level of $32 billion, in June currency.
The report specifies that this level of spending “It would imply a reduction of 11.6% compared to 2017 and 5.7% compared to the 2020 pandemic,” which means that if the real reduction of the first semester is maintained in the second half of this year, real spending would end up at lower levels than in previous years. In this way, the IARAF indicates that “if someone proposes to reduce spending in 2024, they would be starting from a level of spending that is already being reduced.”
What are the disbursements that go down
Of 15 components measured by the IARAF, 12 have a real 22% drop and 3 have a 109% rise. Those that fall are: transportation subsidies (45.8%), other expenses (38.8%), goods and services (36.1%), capital transfers to provinces (34.2%); family allowances (33.6), transfers to provinces (31.9%), subsidies for other functions (31.9%), current transfers to provinces (29.5%), retirement and pensions (18.8%), non-contributory pensions (18.6%), transfers to universities (16.3%), salaries (15.6%), and INSSIP benefits (12.5%). Instead, the components that rise are: real direct investment (28.7%), energy subsidies (56.3%) and social programs (244.8%).
According to estimates by the private report, to achieve this year’s goal of spending $32 trillion, the aggregate reduction since 2017 would be equivalent to $4.2 trillion, of which retirement and pensions should contribute $2.6 trillion, total transfers to provinces $816,000 million and salary expenses $784,000 million.
On the opposite side, if the current spending scheme is maintained, the Programs should increase by $1.4 trillion; energy subsidies, at $1.04 trillion; and real direct investment, in $528,000 million.
Source: Ambito
