All the Answers
Well-known member
The fiscal surplus gives the Government room to postpone the increase in rates and accelerate the decline in inflation - Infobae
Source:
El superávit fiscal le da margen al Gobierno para postergar la suba de tarifas y acelerar la baja de la inflación
El resultado de las cuentas públicas fue incluso mejor a lo esperado y se mantendría en los mismos niveles positivos en marzo. Esto permite aflojar la presión, en especial sobre la clase media, y consolidar el proceso de desaceleración de precios
www.infobae.com
March 20, 2024
The result of the public accounts was even better than expected and would remain at the same positive levels in March. This allows the pressure to ease, especially on the middle class, and consolidate the process of price deceleration.
By Pablo Wende
The Minister of Economy, Luis Caputo (Nicolás Stulberg)
With the probable postponement of a new increase in transportation and energy rates, the Government seeks to accelerate the process of lowering inflation . Possibly in March the index will show a result similar to that of February or even slightly above it. But the bet is to achieve a strong result in April, with the certain possibility of returning to single digits, something that has not happened since 8.3% in October of last year and in the midst of a strong price freeze.
Delaying the rate increase obviously negatively impacts the subsidy reduction plan, which represents a relevant part of the plan to achieve balance in public accounts. However, as the fiscal result was even better than expected in the first quarter, there is greater room to relax the pace of adjustment of public accounts.
Lowering inflation is clearly one of Javier Milei's priorities and showing results in that battle is key for people to continue supporting the official administration that has already completed 100 days. The expectation on Wall Street even exceeds the numbers managed by the Government and they project that the inflationary slowdown will be much more marked in the second half.
On the other hand, the eventual collapse of inflation would come before economic recovery. At the same time, it would allow the President to maintain a high level of approval for his management , which remains slightly above 50% in the polls.
Preliminary data on the evolution of the basic basket in March would also be showing a strong deceleration, after a first week that started hotter.
However, already in the second week there were many discounted prices, which would be reflected in a significant decrease in core inflation. In the second week the increase would have been only 1.7%, the lowest level since September according to estimates by economist Fausto Spotorno.
The “virtuous circle” that the Government aims for is that the reduction in inflation gives rise to a gradual recovery in wages. But, in addition, the return of credit would also help the reactivation process, driven by a lower interest rate and lower demand for financing from the Treasury.
The postponement of the rate increase goes hand in hand with the Government's concern to loosen the adjustment that falls on the pockets of families and put more weight on the shrinking of the State structure . It was even the IMF's number two, Gita Gopinath, who recommended that the Government avoid making the adjustment affect the lower-income population or retirees.
The danger is that the impact falls excessively on the middle class, which has already had to face the rise in regulated services such as cell phones, Internet, prepaid medicine, schools or clubs. To make matters worse, the discussion now continues over the possible reimplantation of the Income Tax for salaries, prior to last year's legislative change promoted by former Economy Minister and presidential candidate Sergio Massa himself.
At the moment there is no agreement between the Nation and the provinces to move forward, due to the high cost that it would generate among more than 800,000 employees who would pay taxes again. As it is a co-participatory tax, part of the additional collection would correspond to the Nation but another to the provinces, as it is a co-participatory tax.
Meanwhile, the markets remain strongly optimistic with Argentina, betting precisely that the fiscal surplus will be maintained and that inflation will consolidate its downward trend in the coming months. Yesterday the bonds had increases of up to 3%, while the bonds (AL2029 and AL2030) shorters surpassed USD 50.
