Government measures for the November elections

After the crisis opened by the forced change of cabinet and the criticisms of Cristina Kirchner on fiscal policy, the Government will move forward this week with the emergency measures to rebuild income and try to recover the lost votes in the STEP. The announcements will be made after the inauguration of the new ministers scheduled for Monday.

The official package includes the revision of the minimum wage to go the agreed increase from 35% to around 45%. A schema is also evaluated Installment payments similar to Now 12 for non-bank cards, credits to zero rate for over a million registered employees and a $ 6,000 bonus for retirees and retirees who charge up to two minimum wages.

Another measure under study is that of do not apply the retirement cap set by the mobility formula approved in 2020. Although the recorded salaries and the list of beneficiaries are taken into account for the calculation of the increase, the overall perception of AnseS sets the limit for salary increases. The idea is to make an exception in December.

“Progress is being made in the measures”, they assured the economic team. De l’AnseS, for its part, They have not yet confirmed if there will be a new IFE style bond, as initially envisioned at the request of areas close to La Cámpora. This measurement is resisted by Guzmán, who argues that last year’s driving restrictions are already in place.

This additional expenditure of 70 billion dollars it will still leave the government a budgetary margin thanks to the savings of the Minister of the Economy, who was in the sights of the vice-president. In his letter, he asked the president to sit down with Martín Guzmán to review the budget sent last Wednesday and speed up the execution of expenditure, which implies an additional injection of $ 550,000 million.

In the first seven months, Guzmán achieved 0.7% of the initial target of 4.2% of the primary deficit in 2021 (now estimated at 4%). The August data which will be known on Monday would give a cumulative amount of 1%, so there would remain 3.2 points compared to the initial calculation. And if the current pace continues, primary red would close closer to 3%.

“Cristina Kirchner is publicly calling for a change of direction in economic strategy which would imply, precisely and according to our budgetary projections, an increase in public expenditure compared to Guzmán’s plan of about 1.3 percentage point of GDP, which is equivalent to an additional $ 550,000 million until the end of the year, ”said the consulting firm Invecq.

Different opinions persist within the government. While the economic team assures that the Economy will use all available spending in accordance with the roadmap set by the Budget, other official sources doubt whether it is possible to run 100% of the games planned by November.

In this context, the government has managed to calculate almost 1% of the additional GDP from resources in pesos through a decree published on Saturday. The measure makes it possible to integrate the IMF’s SDRs into the 2021 budget as current resources, authorizes the Treasury to issue a non-transferable note to the Central Bank and to obtain foreign currency to pay the IMF.

The Ministry of the Economy specified this Sunday that “the DNU institutes the issuance of an Unassignable Bond which improves the composition of the financing of the National Treasury, without the DNU modifying the budgeted primary expenditure “. And the Treasury will allocate the $ 422,174 million for the sale of SDRs to the BCRA to cancel the Transitional Advances for that amount.

These advances are one of the channels of monetary assistance to the Treasury. This monetary issue and its use are already almost at the limit of the regulatory ceiling, so the use of the SDR they will give margin to the Treasury to resort again to funds from the monetary authority to finance the public deficit and possibly increase spending in recent months.

The concern of economists is the impact that this expansion of resources could have before the final elections. “If they wanted to go beyond fiscal and monetary restrictions, they could put the gap and inflation under control, which is why Guzmán has the current deficit pace,” said Lucio Garay Méndez, analyst at EcoGo .

Looking ahead to 2022, Economy said on Sunday that spending on energy tariff subsidies would represent 1.5% of GDP, below the 2.5% expected for this year according to private calculations. This will be achieved with the end of Resolution 46. which established a subsidy for gas producers; import savings thanks to infrastructure works; and the segmentation of tariff subsidies.