The investigation of the business school of the Mediterranean Foundation assumes that the contributions of the Central Bank to the Treasury will be maintained as a transfer of profits, as well as the effect of inflation on State liabilities. It is assumed that this implies a contribution of 1.2% of GDP, so that to reach the “sustainable path”, says the report, a primary fiscal effort of 0.7% of GDP would be needed.
The work estimates that between 2023 and 2025 Argentina should achieve an average favorable balance of 2.7%, which includes the BCRA’s aid, assuming that the economy grows at 3% per year. In that period, the weight of the debt would drop from 83.1% to 82% of GDP, while maturities would go from 8.2% to 10.8%. Meanwhile, payments grow from 1.9% to 2.9%.
To achieve this, according to Capello, “2022 has to be a year of good writing to return to the markets.” In that time, Guzmán should be able to make some spending adjustments.
According to Capello, when the Minister of Economy tries to close the agreement with the IMF, the agency’s technicians will ask him that next year the deficit be 2%, which implies 1.3 points less than what appears in the Budget. “If Guzmán makes a fiscal policy like the one that was in place in the first half of this year, that goal can be easily reached,” he said. The head of the IERAL deepened that “the first candidate to lower spending is the level of subsidies because we went from 1.4 points in 2019 to 3.4 and it is clear that there 1 point could be saved in a year.”
In order to achieve sustainability under these conditions, what the government does next year will be key, a period that is far from the presidential elections in which the government can have greater room for maneuver.
The IERAL indicates to order the political economy incentives “an agreement with the IMF at the beginning of 2022, which avoids fiscally opportunistic behavior, could help in a crucial way.” “It is so convenient for the current administration, to move through the second half of the term in a more orderly manner and have a more manageable situation in a possible new administration, and it could serve the opposition, which has the expectation of winning the election in 2023 ”, says the work.
The report warns that if Guzmán aspires to have a deficit of 3.3% next year that is projected in the 2022 budget, in 2023 he would have to apply an adjustment of 4% of GDP to achieve the necessary surplus foreseen by the IERAL ( 0.7) something that would be unfeasible
Source From: Ambito
David William is a talented author who has made a name for himself in the world of writing. He is a professional author who writes on a wide range of topics, from general interest to opinion news. David is currently working as a writer at 24 hours worlds where he brings his unique perspective and in-depth research to his articles, making them both informative and engaging.
