In recent days, two initiatives of the Kirchnerist hard wing have become known pay more money on the street.
One is the project Base salary universal presented last tuesday. The other, announced the previous week, a moratorium on pensions for the people no years of contributions needed to receive a pension.
A calculation by the consulting firm Analytica estimated that the budgetary cost of the two measures assumes an additional increase in expenditure of 2,000 billion dollars per year, or 2.66% of GDP.
To give an idea of what the amount means, there are two comparisons:
– is equivalent to the commitment of budget deficit signed by Minister Martín Guzmán with the IMF for this year,
– is equal to the amount the government has spent on subsidies in almost two years.
– the main three social programs which are the food card, the progress plan and the promotion of work, consume 0.66% of GDP per year.
Said in Creole: the Kirchnerist proposal not only goes against the agreement signed with the organization but also goes in the opposite direction of what Guzmán is looking for because would double the current fiscal imbalance.
None of the aforementioned proposals has been consulted by the Ministry of the Economy. As they are not provided for in the program with the IMF, find it difficult to find the support of the economic team.
In these days, contacts have taken place between the Palacio de Hacienda and the staff of the Fund in view of the revision of the program and the disbursement of June.
The work of Analytica was carried out on the basis of the following calculation: – The proposal of the deputies presented on Tuesday to the Chamber of Deputies Delia Parodi is equivalent to an additional public expenditure of 2.4% of the GDP. This involves paying an amount equal to the basic food basket (about $15,500 in July) to 8,900,000 beneficiaries (those registered in IFE 1). From this number of recipients, for every additional million people who receive the benefit, 0.26% of GDP is added to expenditure in a year.
– In the case of the pension moratorium, there are some 800,000 people eligible for retirement. Analytica calculated that there are around 300,000 receiving it this year. This would mean an additional 0.13% of GDP. The other 500,000 would add another 0.2%.
If you add each component of the exercise, at least for one year, you have that 2.4% + 0.13% would equal an impact of 2.53% of GDP.. “This in money is 2 billion dollars, unachievable for the Argentine economy”sums up Ricardo Delgado, head of Analytica.
Kirchnerism encouraged and also proposed measures that would have no fiscal impact. For example, advancing the minimum wage or parity. It is another thing to protect income from inflation and not free up additional resources.
Economics approved of the idea. In his Twitter account on Friday, he highlighted as one of the “5 good news of the week” that the Government is advancing increases in the minimum, living and mobile wage.
There were other measures in this line.
“In the tax area, it has been confirmed that increasing the incomes of pensioners, low-level monotributors and informal workers will reach 13.6 million people, including 6.1 million pensioners, and will require 206 billion dollars (0.3% of GDP)”, indicates a document this Friday from the Delphos cabinet. Similarly, Sergio Massa activated measures to raise the income floor to around $265,000 from the current $225,937 in June and the increase in the living and rolling minimum wage was brought forward with a 17% increase in June. and 5% in August.
To understand, Kirchnerism intensified the blows against the minister through two channels: statements and the pretext of further increasing public spending.
Andrés Larroque, minister in the government of Axel Kicillof, declared that “No one voted for the minister”. Cristina Kirchner then criticized inflation and said that it is not enough for workers to get out of poverty.
Finally, Kirchnerism also lobbied the minister by setting the economic agenda for Congress. Not only with measures to protect workers from price increases, but also with bills to increase the level of public spending. Clear blows against fiscal consolidation and Guzmán.
“All these measures aim to improve the incomes of workers, retirees and beneficiaries of social plans, but they further complicate the achievement of the tax objective, which was already strongly demanded by the increase in energy subsidies. It is therefore not surprising that the monetary issuance to help the Treasury has been activated again, adding another $86,500 million,” explains Delphos. “In total, 41% of the transfers authorized by the agreement with the IMF have already been consumed, i.e. some 705,200 million dollars, a limit which will probably only increase to 740,000 dollars under the effect of the higher inflation”. According to this consultant, inflation at the end of the year could reach 75%.