The economic power is more concerned about the return of Cristina Kirchner than achieving the budget goal

Friday, July 27, 2018 12:41 PM

Nicolás Dujovne and the Secretary of Finance, Rodrigo Pena, have confidence in exceeding the fiscal goal of the current year

Earlier this week, a senior government official The Economic Zone telephoned over to the executive of a New York bank that Nicolás Dujovne had just announced that for the sixth quarter the government has reached the point. objective to reduce the fiscal deficit, and told him that in his opinion the year would end with an exaggeration that would leave the deficit lower than 2.7% of gross domestic product.

The financier praised the realization, but told him that what worries him the most is not the tax issue but the possibility that Cristina Fernández de Kirchner can win the presidential election. Next year.

The government is caught in a typical trap 22, a situation in which any alternative that chooses damaging ermina, as masterfully Joseph Heller wrote in the 1961 novel that was taken to the cinema by Mike Nichols with performance Orson Welles, John Voight, Anthony Perkins and Alan Arkin, among others.

The trap in which he finds the government is that while he does not reduce the deficit as he was committed to the IMF, he finds himself without Christine Lagarde's funding and even less by the private sector, with which the macro-model would approach the precipice; but if it conforms to the adjustment, the social and political consequences can seriously jeopardize the re-election of Mauricio Macri, reopen the scenario of the return of Kirchnerism, and make those who have the money to lend and invest not do not do it out of fear.

Dynamics of the dog biting its tail

The rejection of economic power by Kirchnerism leads to behaviors that broaden the possibility that Kirchnerism will return. A loop The self-fulfilling prophecy.

Miguel Ángel Broda made it clear in a report by Luis Novaresio last Monday. "If the world realizes that Macri is a parenthesis between two Peronisms, 2019 is going to be a year in which we will not grow.The expectations that we will fall back into Peronism are devastating for the funding that l? Argentina needs. "

Until last March, which was a distant probability, since the monetary crisis triggered was an alternative that is developing in the bets. Absolutely demonstrated by all the surveys that are circulating, which are based on the succession of negative data on the management of the government and the sharp fall in the image of Mauricio Macri as well as María Eugenia Vidal and Horacio Rodríguez Larreta.

In addition, the much-dreaded alternative of economic power is projected from the series of bad news ahead.

At the horrendous official data known about June's inflation, about the collapse of economic activity in May and the destruction of jobs registered so far this year, "we have a series of bad news for several months " acknowledges with resignation the same official.

Incoming activity and income

The Indec calendar shows that on August 2 the fall of industrial activity in June will be known; on the 15th of this month, inflation will be raised again in July; next week, negative data on the level of activity in June will be released; On September 25, the foreseeable deterioration of the income distribution will be new; and two days later the worst data will be reached: the poverty and indigence indices corresponding to the first half of 2018, that there is no miracle will reflect a setback.

"I want you to judge my presidency by how we are moving towards the goal of zero poverty," Macri repeated over and over again

Mauricio Macri and Christine Lagarde were clear and sincere in their recent public appearances. At best, the economy will resume the positive path early next year, although the Fund does not rule out the recession begun last year. quarter continues in 2019.

It would be nothing strange given that the adjustment that has already supported wages, pensions and family allowances, will add further deepening of public spending cuts With less consumption, less public spending and productive investment curbed by the fear of a return of "populism", the improvement in aggregate demand that leads to reactivation is limited to rising to An increase has taken place, which would have been higher if it had not had the impact of the drought, but which would be far from offsetting the contractionary effects of the other components of aggregate demand.

The reduction of public spending is not a subject of discussion only in view of the budget of 2019. The reduction is already underway. During the first half of the year, capital expenditures declined by 20% in nominal terms, which, in the face of inflation, fell sharply.

Construction Brake

the consequences are in sight. For example, UOCRA estimates that in Salta and Jujuy there are already 8,000 unemployed building workers which is the same as that requested by the Salteña Construction Chamber, pointing out that the decrease and paralysis of work The course causes "the dismissal of staff, the modification of the chain of payments, the closure of companies and the cancellation or delay in the delivery of works to their natural beneficiaries".

The most affected element was the housing construction. The Housing and Town Planning section for the current year stands at nearly $ 35,000 million (which includes social housing and the Procrear Plan), which in real terms is less than what was attributed in 2015 or 2016.

This figure is too high for the housing deficit to decrease, which is compounded by the fact that most provinces use some or all of the funds that they have. they receive automatically through the National Fund. Housing (FONAVI) for current expenses. They represent about $ 17,000 million a year, fueled by the fuel tax and having a specific destination, but a decision made by Domingo Cavallo in 2001 allowed the provinces to reallocate money to other countries. 39 other expenses.

The government is trying to force governors that the provinces use Fonavi's money to take over what the nation has done up to here. Of course, for this the provinces should reduce other expenses. It is precisely the purpose: to transfer to the provinces a portion of the adjustment committed to the Fund.

Why Should Governors Accept Something Like It? Because they are not in agreement for good, Casa Rosada threatens to cut them for money for work in the province that finances the Nation. They are also locked in a trap 22.

By Marcelo Zlotogwiazda

Source: https://www.infobae.com/economia/2018/07/27/ al-poder-economo-the-preocupa-mas-el-return-of-cfk-that-el-destino-of-the-meta-fiscal /

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