The changes introduced by the opposition in some of the points of the fiscal package which was included in the omnibus bill would not alter the fit too much which was raised approximately a month ago by the Minister of Economy, Luis Caputo. The head of the Treasury Palace proposed a 5-point GDP correction program that should end in a primary surplus of 2 points of GDP in 2024.
“It does not modify it too much because it maintains export rights, except for regional economies, that doesn’t change too much in terms of volume,” he told Ambit Hernan Letcherhead of the Center for Argentine Political Economy (CEPA).
An element to take into account for the success of the plan is that without modifying anything in the field withholding scheme, lThe collection of this tax can contribute between 0.7% and 1% more of GDP in 2024.
In accordance with Data from the Argentine Agroindustrial Council (CAA) in 2023, some US$18.9 billion in exports were lost due to the drought, with a drop of 35% compared to 2022. That money with its associated taxes will be recovered without new effort in this fiscal period.
On the other hand, Letcher highlighted, in relation to spending on retirements, that the update would begin from April. In that period, he maintains that The Government would “eat” an increase that should go from December to February. “There are no updating or splicing mechanisms,” he explained. Caputo’s plan foresees a saving of 0.4 points of GDP in this area.
On the other hand, the law proposes a significant increase in the non-taxable minimum of the Personal Property Tax, which rises to $300 million, maintaining rates of 1.25% and 1.5% Therefore, the economist considers that “the effect should be neutral.” In This is expected to raise half an additional point morealong with the moratorium and money laundering.
Adjustment: official plan numbers
Thus, in order to see the true dimension of the plan of the head of the Treasury Palace, we will have to wait for the final data on the fiscal deficit for 2023, which for the Government would have closed at 3% of GDP, although that is an estimate made at the time. time to assume.
Insteadif the estimate of some private analysts who predict a primary loss of 2.5% is correct of GDP, then of the 5 adjustment points proposed by Javier Milei’s government, half a point would have already been resolved, with which the distance to travel should be 4.5% of GDP.
Thus, in official estimates, this year the Additional collection will be equivalent to 2 points of GDPwhile the trimming of expense would be 3%. What could alter the calculation is that Tax collection falls due to lower economic activity or that the result of higher income tends to be offset by losses.
On the spending side there are also opposite effects. For example, if inflation does not subside significantly, the expenditures themselvesTransportation subsidies or public service rates could rise, because salaries would be delayed, which would force the government to maintain them.
To take into account the starting point it is also good to see How was the 2023 Budget extended by the Executive Branch to 2024. An analysis by the Argentine Public Budget Association (ASAP) indicates that the amount of expected current income would be $27.9 billion, against current expenses of $37.1 billion. In retirement, budget credits for $13 billion are allocated. It is evident that Corrections will be made throughout the year. to include new resources or reduce expenditures. In fact, the current budget has a current deficit of $9.2 billion.
Source: Ambito
