He adapted the projections of the Budget voted in November 2022, which forecast inflation of only 60%. The annual items now grow to $36.5 billion, but analysts believe that they will have to be raised again.
On November 16 of last year, the ruling party in the Senate, in alliance with provincial parties, managed to sanction the 2023 Budget, a norm that anticipated inflation for this year of 60%, with an expense of $29 billion and a primary fiscal deficit of 1.9% of GDP. But as the months passed, all these projections were misaligned because the increase in prices would probably double what was forecast and, along with it, both income and expenses would nominally double, and the red of the accounts.
Thus, just because of the miscalculation of inflation, the Executive Power is forced to periodically update the mother law of the national public sector, above all, because in contexts of high nominality such as the current one, there are items that run out more quickly. This is what happened through the DNU 436 that was published this Wednesday in the Official Gazette, in which a maxi adaptation of the items is carried out.
According to an analysis by the Argentine Public Budget Association (ASAP), the Government increased spending items by 26% to $36.5 trillion. In other words, $7.6 trillion was added to the credit in force until July 31. The entity points out that through the DNU the calculation of resources was increased by $3.6 trillion. ASAP states that “it is the consequence of higher spending authorizations for 370 programs and reductions in three.” The DNU estimates that the deficit will rise by $4 trillion and for this, financial sources (debt) will be increased by the equivalent.
The two most important reinforcements are for the Ministry of Labor, with $1.8 trillion, and debt service, $1.5 trillion. In the background are the Ministry of Education, with $758,200 million, and the Ministry of Social Development, with $743,600 million.
Nadin Arganarazhead of the Argentine Institute of Fiscal Analysis (IARAF), explained to Ámbito that the modification is “an adaptation” of the numbers to the evolution of inflation. “In an economy with the inflation that Argentina has, you have to accommodate the numbers,” he said. The economist argued that what is relevant is that the relationship between the fiscal deficit and the Gross Domestic Product is not altered, which by the end of 2023 must remain at 1.9% to meet the IMF goals. In principle, the DNU would not be doing it.
Aldo Abramdirector of the Libertad y Progreso Foundation, considered that, although the measure seeks to adapt the nominal value of the budget to the inflation that has elapsed this year, it is It is probable that a new decree will have to be issued before the end of the year. “They are probably estimating it with an inflation of 120%, but if it reaches 150% as we are seeing, they may be correcting it with another decree later on,” he explained. The economist agreed that the DNU would maintain the deficit/GDP ratio of 1.9%, but that this itself would not be reflected at the end of the year. “The package that Sergio Massa announced raises the deficit by half a point, so we believe that in the end it will remain at 2.7% or 2.9%,” he projected. Abram supposes that the Government now did not make a higher adjustment of items because “otherwise they would be revealing the true inflation that they are projecting.”
Source: Ambito
