By decree, the Government plans to give the green light in the coming weeks to a new budget for this year, which will incorporate, among other new features and clarifications on official planning, a new guideline on inflation, tax revenues and expenditures, including the amount of energy subsidies.
In addition, official sources have confirmed that with a significant advance in the wage parity close and after the presentation of the new “Law of Laws” (it will give an indication of the re-estimated price increase pattern for 2022), will issue a decree to update the minimum ceiling from which income tax will be paid (it is today from a gross salary greater than $225,937). It would become official, they told THE NATION, in July or August. It is a decision planned by the Economy, beyond the pressure of the Front de tous channeled a few days ago by Sergio Massa.
The new budget will be approved before June 30, a significant delay given that in the agreement with the International Monetary Fund (IMF), a modification of the current standard was foreseen to bring it in line with the primary deficit target for 2022 agreed in the program of extended facilities (EFF, according to the acronym in English) see you no later than April 15.
In government, they claim that it was the organization headed by Kristalina Georgieva that offered more time for “tabulate more precisely” the global impacts of the war in Eastern Europe. On Friday, for example, he was all the rage among officials the last cover of The Economist on this topic. THE NATION he consulted the Fund, but received no response.
Official sources have also acknowledged that after the rejection in Congress of the 2022 budget proposal and the extension of the previous one, the mid-year deadline meets the restriction implied by budget quotas. “It’s operationally difficult to work without it,” they said. “The decree must also reflect the current conditions regarding the readjustments we will make to achieve the objective [con el Fondo]given the shock of war”, they said to this media. In this sense, with the change in the macroeconomic framework to be put in place, changes in income and expenditure are expected.
The budget presented last September – which was rejected – provided for a price increase of 33% for this year. In this initiative, the 2021 guideline had already been changed (originally 29%) and it was raised by 16 points (45.1%), despite the fact that inflation ended up being 50.9 %. The agreement with the Fund provided for a price increase of between 38% and 48% for 2022. The latest IMF outlook only retained the ceiling of this band. However, the paritarias are currently closing at 60%; the economic team works with an “optimistic scenario” of 65% and the private sector estimate that it will be around 70%.
Such nominality of the economy will add additional income to the treasury. Part of them was used to give bonuses to informal workers, pensioners and monotributistas. With improvements to the food card and other programs, the cost has risen to 0.44% of GDP. The bill was paid by inflation, says one in Economy. Just in case, they keep designing new taxes: Guzmán will insist on his tribute to “unexpected income”, according to official sources, which will impact certain companies in 2023.
Regarding expenses, given the impact of the Russian invasion of Ukraine on energy prices, they should increase. Friday, The main result for April showed that energy subsidies rose 132.8% year-on-year that month and reached $116.673 million. They represent $66,559 million more than what was paid in April 2021.
In this context, at the Ministry of the Economy, they hope that after passing the public hearings on electricity and gas, On June 1, the Secretary of Energy, Darío Martínez, publishes the resolution ordering the regulatory entities -managed by La Cámpora- to update the new tariff schedules. There will also be price segmentation. Within the government, they believe that its implementation will be extended over time. Perhaps it will come when the cold decreases the weight of the increase. To improve the offer, Guzmán may present this week the stock easing decree in the energy sector. The minister has been promising this since last March.
The new budget will have two fundamental norths: adaptation to the global context and agreement with the Monetary Fund, and Guzmán’s intention to anchor private sector expectations to curb inflationary inertia. The program with the IMF provides for a primary budget deficit of 2.5% of GDP, a reduction in emissions (1% of GDP) and an accumulation of reserves. For Guzmán, the credibility – of his plan – and the dollars of the Central Bank (BCRA) are the anchor points.
But reducing inflation involves a huge political challenge, since the macroeconomic order itself requires an inflationary plan. in itself. The agreement with the IMF provides for rate hikes and a dollar that follows prices more closely. Inflation limits the political possibilities of the Frente de Todos for 2023 -Cristina Kirchner knows this-, but at the same time it is the main partner of the government when it comes to reducing the deficit thanks to the “inflationary tax”.
The Minister maintains the discourse that the inflationary inertia currently responds to the exorbitant international prices due to the war and the unanchored expectations it generates the very tough trainee in the power dome.
Supported by the President, this last speech led him to announce the absorption of internal trade, portfolio led by Roberto Feletti, bishop of Cristina Kirchner. After Feletti publicly called for restraints and criticized Guzmán’s plan with the IMF, the minister demanded that he align himself with the government. On Friday, the institutional response was given.
It’s a move that Guzmán and Matías Kulfas started rallying around in March. “It was not a response to Cristina’s speech at the Chaco”, thrown at the government. This was agreed weeks ago with Alberto Fernández. What’s unusual is that Feletti only found out about it on Tuesday, when Guzmán called him in and told him face to face after cutting off ties since early April when the Commerce Secretary warned him: “It’s gonna get ugly.”
The formalization of this political signal of a key area for Cristina Kirchner was given with a photo sent Friday afternoon by the teams of both. There appeared the Minister of Economy and Productive Development. Curiously, despite the fact that the announcement was only about the management change, Feletti was not there. The “Albertists” left it aside.