According to a report by the consulting firm Invecqthis adjustment has to prevent a 6-point decline in GDP from being projected by 2024, although strictly speaking the firm led by the economist Esteban Domecq considers that the adjustment would have to be 5 points of GDP.
This year, it will close with an equivalent primary loss 3 points of GDP and, if debt interest is added, it rises 2 points. But based on Invecq estimates, in the hypothesis that the government did nothing and left the spending and income structure intact, the red would go to 6 points.
The adjustment has to be large, therefore, following the analogy of President Javier Milei, it would have to have a considerable “chainsaw” part, but this will have to be combined with the use of a scalpel to avoid affecting sensitive items.
In this regard, the new government spokesperson, Manuel Adorni anticipated that “the measures will be in line with a strong tax cut, with some expansion in social items and this package will be accompanied by the removal of privileges.” The president held the first Cabinet meeting in the Casa Rosada where the package of measures was analyzed. “Each of the current contracts and contracts will be reviewed, also with universities,” he anticipated.
Depending on the directive issued by the head of the Executive Branch regarding what “there’s no money”, It is assumed that the adjustment will have to be addressed above all on the spending side. Recently a report from the Argentine Institute of Fiscal Analysis (IARAF), directed by the economist Nadín Argañaraz, stated that to achieve balance the government should do a 25% spending cut compared to 2023, in real terms.
The report indicates that this year the national public sector would close with total income of $41 billion and primary expenses of $47.4 billion, which would leave a negative primary result of $6.6 billion. Translated as percentages of GDP, they would be revenues of 17.2%, primary expenditures of 19.9% and primary deficit of 2.8%. Interest must be added for $5.1 billion (2.1%) for which The total deficit in 2023 would be $11.7 billion (5.1%).
Starting from that point, the IARAF considers that, if the discretionary transfers to the provinces 23% of the necessary adjustment would be covered. If you add the public work, The adjustment would be covering 48.3%. And by incorporating an elimination of spending on energy subsidies, would reach 82.5% of what is required. What remains could come from eliminating the deficit of public companies.
Taking into account the value of the current currency, To the $11.7 trillion fiscal deficit that would remain this year, we would have to add the floating debt, That is, expenses accrued this year that will not be paid and will be carried over to the next year. According to the latest data from the General Treasury of the Nation, that debt was $1.8 trillion in October.
Source: Ambito
