ARGENTINA
On September 22, the Deputies Budget Committee received the Minister of Economy, Martin Guzman, at a meeting to begin discussion on the 2021 Budget Bill. Guzmán stated that the primary deficit target is 4.5% of the Gross Domestic Product (GDP). “We must regain the path of growth to create work for the whole country and stability to allow people to develop in an environment of economic stability,” he said. Access the document he presented during his speech by clicking here. The debate will continue next Tuesday with the attendance of Finance Secretary Diego Bastourre, Economic Policy Secretary Haroldo Montagu and Treasury Secretary Raul Rigo.
During his presentation, Guzman said that currently 35.5% of the population is poor with 8% living in extreme poverty. He also noted that the 2019 inflation rate was 53% and that the year-on-year figure for August 2020 stood at 40.7%. “GDP is not growing, and furthermore, at the outset of the pandemic, it suffered a 19% drop. This is a difficult situation as there are economic and social problems involving structural issues,” he said.
As for the main goals enshrined in the 2021 budget, the minister said that “the idea is to achieve a productive structure that embraces inclusion, offering everybody possibilities. The second goal is to achieve productive dynamism, a structure capable of adding value. The third is macroeconomic stability, something that has been absent throughout most of Argentina’s history. The fourth objective is to create a scheme guaranteeing federal equity. And the fifth is respect for sovereignty.”
On the other hand, the official indicated that the government is anxious to adopt “macro prudential regulations which will favor real investments and discourage capital speculation.” He also mentioned the foreign debt, adding that the Executive branch will seek “a gradual reduction of monetary financing and a greater participation of national currency in public credit.”
He also referred to the new foreign exchange restrictions introduced by the Central Bank, emphasizing that “these are temporary” and aimed at stopping the loss of foreign currency reserves. “These measures are designed to avoid a path ending in greater instability. We are not happy about it,” he said.
Moreover, he added that: “To be able to sustain the demand for foreign currency, our foreign reserves need to increase, as so do exports. We have not yet managed to build a productive structure capable of setting itself these objectives. The lack of dollars is a barrier to the sustained growth of the domestic market. There is no way to stabilize the economy if cannot recover.”
Finally, he emphasized that the government is keen to boost employment and public investment over time, aiming for gradual and consistent disinflation, and softening the tax regime.