Government Economic Cabinet Details the Budget 2021 in Deputies
9 octubre 2020

ARGENTINA

On September 29, the members of the economic team at the Ministry of Economy gave details about the 2021 Budget Bill to the Budget and Finance Committee. The meeting was attended by the Secretary of Economic Policy, Haroldo Montagu, the Secretary of Finance, Raúl Rigo, and the Secretary of Finance, Diego Bastourre.

At the beginning of the presentation, Haroldo Montagu said that in the second quarter of 2020 GDP “recorded the biggest fall in recent history”, corresponding to 12.6%. He also indicated that private consumption levels have fallen to those similar to 2015, concluding “a deterioration of almost five years”.

“An economy unable to recover will not be calm by any means. To achieve this and exit the macroeconomic extremes we have in Argentina, we need to regain the path of fiscal stability and external stability,” he said, stressing that the purpose of the 2021 Budget is “to build a bridge between the economy we have now and the one we want to achieve”, making it “a transition scheme.”

Raul Rigo indicated that one of the criteria for this budget is to achieve “the balanced and stable management of the fiscal deficit”. He referred to the fact that the government is keen to find “a solid and prudent response” to the challenges of macroeconomic imbalances, “inherited from the previous admnistration and exacerbated by the pandemic.”

The official also pointed out that one of the objectives entailed the need to press on with “an expansive fiscal policy” achieved through a composition of primary expenditure. He also explained that the bill “provides a framework of macroeconomic consistency, sending a message to the economy; and containing and aligning expenditure with the priorities of this administration.” He added that they will seek “genuine financing” to progress with public policies that “do not generate new imbalances.”

Finally, Diego Bastourre indicated that the 2021 Budget proposes “a realistic and prudent financial program because it is consistent with another aim, which is the development of the local capital market. Also because it makes a reasonable and balanced use of different financing tools.”

He added that the “real challenge of 2021” is to keep net funding needs at 3.15%. “When we say that this is a viable budget, we are also looking at the following: low foreign currency borrowing needs and also a 2021 where maturities affect the national public sector, so we have a relative advantage over 2020.”

“An economy that does not recover will not be calm by any means. To achieve this and exit the extreme macroeconomy we have in Argentina, we need to walk a path of fiscal stability and external stability,” he said. With this in mind, he stressed that the purpose of Budget 2021 is “to build a bridge between the economy we have now and the one we want to reach”, so it is “a transition scheme”.

For his part, Raul Rigo indicated that one of the criteria for this budget is “a balanced and stable management of the fiscal deficit”. In this way, he assured that the government seeks to be “a solid and prudent response” to the challenges of the macroeconomic imbalance, which was “inherited from the previous management and worsened by the pandemic.

The official also pointed out as an objective the need to move forward with “an expansive fiscal policy” that would be given through a composition of primary spending. He also explained that the bill “allows to give a framework of macroeconomic consistency; to send a message to the economy; and to contain and align the expenditure to the management priorities”. In this sense, he added that they will seek “genuine financing” to advance in public policies that “do not generate new imbalances”.

Finally, Diego Bastourre indicated that the Budget 2021 proposes “a realistic and prudent financial program because it is consistent with another of the aims which is the development of the local capital market and because it makes a reasonable and balanced use of the different financing tools”.

He also said that the “real challenge of 2021” is to keep net funding needs at 3.15%. “When we say this is a viable budget we are also looking at these things: low foreign currency borrowing needs and also a 2021 in which the maturities are with the national public sector, so we have a relative advantage over 2020,” he added.

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