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Disappointing data and signs

Disappointing data and signs
Disappointing data and signs

Yes ok The authorities continue to affirm that there are “signs of recovery in various sectors” and that “income, wage bill and pensions are being strongly recomposed”, the statistics do not support these assertions.

Industrial activity is at values ​​very close to the levels of the health pandemic. The Industrial Production Index (IPI) for April, published by INDEC, marked a year-on-year drop of 16.6%. Although there was a slight positive monthly variation of 1.8% during the month, it is a specific figure and the sharp drop in March (-4.1%) has not been recovered. Of the 68 subdivisions of the index, only 8 register a year-on-year increase. This did not happen even at the worst moment of the Covid-19 pandemic when there were 11 divisions with growth, three more than now.

The construction sector follows the same trend. The year-on-year drop in the month of April (-37%) places it at one of its worst historical levels. The impact of the stoppage of public works is reflected in the poor performance of related inputs: asphalt, iron and steel showed drops close to 60% year-on-year.

A few days ago the government issued a statement highlighting the “recovery of real wages” in April. After two months of increases (March, +2.7% and April, +6.7%), it must be said that the growth occurred after a very significant fall, concentrated in a short period (-19.2% between November 2023 and February 2024). The data do not confirm a trend towards the recovery of salaries, rather they are a product of the updating of collective agreements that occurs after the price increase.

In this context, the CPI for May was known last week: 4.2% monthly variation. Once again, the government took it upon itself to celebrate, although there is no merit in achieving a slowdown in inflation based on a significant drop in economic activity and domestic demand.

Base Law and fiscal package

In the midst of a reprehensible action by the Ministry of Security, which repressed citizens, including national deputies who approached the vicinity of the National Congress, the Senate gave general approval to both initiatives.

The vote on the Bases Law was a very close vote, to the point that a tie was obtained with 36 senators in favor and the same number against and it was the Vice President of the Nation who, with her affirmative vote, decided to approve the law in general.

Although the original projects were very reduced, compared to the proposal that the Executive initially sent to Deputies, their essence continues to be absolutely harmful. The delegation of powers (economic, administrative, financial and energy) is maintained for one year to a president who says without any qualms that he is a “mole infiltrated the State to destroy it from within”which constitutes a huge risk.

One of the important modifications is the elimination of the repeal of the moratorium law. A proposal that implied that those who did not have the years of contributions to retire would have to wait until age 65 to access only 80% of a minimum asset through the Universal Pension for Older Adults (PUAM).

Aerolíneas Argentinas, Correo Argentino, Radio y Televisión Argentina were removed from the list of companies susceptible to privatization. Only Enarsa and Intercargo would remain on the list of those feasible to privatize or concession; Aysa, Belgrano Cargas, Road Corridors and Argentine Trains. Meanwhile, Nucleoeléctrica Argentina Sociedad Anónima and Yacimientos Carboniferous Río Turbio may incorporate private capital but with majority shares of the State.

Additionally, some limitations were established to the Large Investment Incentive Regime (RIGI). It was limited to some sectors in particular: “forest-industry, infrastructure, mining, energy and technology” and were added “oil, gas, steel and tourism”. The commitment to purchase inputs from local suppliers was established “at least 20% of the entire investment amount, as long as the offer is available and under market conditions”. The terms of foreign exchange settlement for the exports generated by these investments were also extended, although in any case, from four years after their start-up, these investors will not have the obligation to reinvest or liquidate in the market. Argentine exchange rate the foreign currency obtained from exports.

The problem is the RIGI and its essence, which means directing investments mainly towards primary sectors based on extensive tax, customs and exchange benefits. This is the opposite of the specific incentive policies seen in many developed countries. The national industry and in particular SMEs, which are already suffering the most painful consequences of the libertarian adjustment, will be the main affected sectors. The negative effects on the level of employment will not be long in coming.

Finally, the Senate eliminated the chapters on Personal Assets and on the restitution of Income Tax from the fourth category, which implied greater tax regressivity.

The Executive Branch has expressed its intention to insist on the modification of the Income and Personal Property Tax in Deputies. In my opinion, the Chamber of Deputies cannot insist on the issues rejected by the Senate. The system is bicameral and that is why projects must be approved by both chambers.

The threats to all citizens are more present than ever, as a result of both the adjustment that is being carried out and the reforms with which they want to destroy the State and configure a society based on “every man for himself”.

National Deputy Union for the Homeland – President of the Solidarity Party.

Source: Ambito

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