The Government told the IMF that poverty already affects more than 50% of Argentines - Infobae
Source:
February 05, 2024
In a document presented to the international organization, the Ministry of Economy made a harsh diagnosis of the current economic panorama and assured that they are doing everything possible to protect the most vulnerable sectors.
IMF recommends temporary expansion of social aid to government (Photo by Ricardo Ceppi/Getty Images) Ricardo Ceppi | Getty Images
The government estimates that more than 50% of Argentines live below the poverty line and that number is close to 60% for children, according to the letter of intent presented to the staff of the International Monetary Fund (IMF).
The document signed by the Minister of Economy, Luis Caputo , and the head of the Central Bank, Santiago Bausili , ensures that the current administration “has inherited the worst economic, financial and social situation in our history, with an economy on the brink of a crisis. due to chronic and widespread macroeconomic imbalances.
In this sense, they stated: “Real salaries have decreased and levels of informality and poverty have increased. Today, more than 50% of Argentines live below the poverty line , and that number is close to 60% for children.”
It is worth remembering that, according to the latest data available from Indec, in the first half of 2023, poverty reached 40.1% of the population.
As a solution, they indicate that they are in the process of implementing “an orthodox and ambitious stabilization plan aimed at correcting the extensive policy failures of the previous administration to avoid the collapse of the economy.”
In this regard, the letter of intent states: “Our program is based on an ambitious fiscal adjustment of approximately 5 percent this year, achieved through a balanced combination of spending cuts and, initially, temporary revenue measures, which provide room for increase social assistance.”
According to the government, around 60% of children live in poverty (Fernando Calzada)
Regarding the fiscal deficit, Caputo and Bausili assured that in 2023 it exceeded 5% of GDP, reaching and rising to 15% when taking into account quasi-fiscal costs. “The monetization of the 2023 fiscal deficit by the Central Bank reached 5% of GDP, fueling inflation, creating a large oversupply of pesos and significantly weakening the central bank's balance sheet,” they considered.
“Upon taking office, we faced a dangerous 5% collapse in industrial activity and uncontrolled inflation already at a daily rate of 1.5%, close to hyperinflation. We also had imminent payments to the IMF and international bondholders of over $2.5 billion. With insufficient international reserves in the Central Bank, we face the risk of not being able to meet our external obligations,” they said as a diagnosis of the country's situation.
“Liquid international reserves were depleted, and net international reserves fell to an alarming deficit of USD 10.3 billion. In short, misguided economic policies led to the loss of access to private financing and jeopardized access to crucial multilateral financing,” they added.
With this diagnosis, the Minister of Economy details in the document that public spending is being drastically rationalized through several cuts in poorly directed and inefficient energy and transportation subsidies, public employment, capital expenditures and transfers to provinces and state companies.
According to the International Monetary Fund, total poverty in Argentina has increased to around 45%. EFE/Lenin Nolly. EFE
“Revenue is being mobilized through a temporary increase in export taxes and the tax on access to foreign currencies (country tax), as well as efforts to reverse harmful changes in the personal income tax,” it indicates.
And he adds: “Over time, we will seek to safeguard our consolidation and improve the quality of adjustment, including through reforms that strengthen and simplify the tax system, improve the sustainability and equity of the pension system, and continue to reduce the burden while increasing the efficiency of public spending, including in areas such as subsidies, social programs and infrastructure.”
Source:
February 05, 2024
In a document presented to the international organization, the Ministry of Economy made a harsh diagnosis of the current economic panorama and assured that they are doing everything possible to protect the most vulnerable sectors.
IMF recommends temporary expansion of social aid to government (Photo by Ricardo Ceppi/Getty Images) Ricardo Ceppi | Getty Images
The government estimates that more than 50% of Argentines live below the poverty line and that number is close to 60% for children, according to the letter of intent presented to the staff of the International Monetary Fund (IMF).
The document signed by the Minister of Economy, Luis Caputo , and the head of the Central Bank, Santiago Bausili , ensures that the current administration “has inherited the worst economic, financial and social situation in our history, with an economy on the brink of a crisis. due to chronic and widespread macroeconomic imbalances.
In this sense, they stated: “Real salaries have decreased and levels of informality and poverty have increased. Today, more than 50% of Argentines live below the poverty line , and that number is close to 60% for children.”
It is worth remembering that, according to the latest data available from Indec, in the first half of 2023, poverty reached 40.1% of the population.
As a solution, they indicate that they are in the process of implementing “an orthodox and ambitious stabilization plan aimed at correcting the extensive policy failures of the previous administration to avoid the collapse of the economy.”
In this regard, the letter of intent states: “Our program is based on an ambitious fiscal adjustment of approximately 5 percent this year, achieved through a balanced combination of spending cuts and, initially, temporary revenue measures, which provide room for increase social assistance.”
According to the government, around 60% of children live in poverty (Fernando Calzada)
Regarding the fiscal deficit, Caputo and Bausili assured that in 2023 it exceeded 5% of GDP, reaching and rising to 15% when taking into account quasi-fiscal costs. “The monetization of the 2023 fiscal deficit by the Central Bank reached 5% of GDP, fueling inflation, creating a large oversupply of pesos and significantly weakening the central bank's balance sheet,” they considered.
“Upon taking office, we faced a dangerous 5% collapse in industrial activity and uncontrolled inflation already at a daily rate of 1.5%, close to hyperinflation. We also had imminent payments to the IMF and international bondholders of over $2.5 billion. With insufficient international reserves in the Central Bank, we face the risk of not being able to meet our external obligations,” they said as a diagnosis of the country's situation.
“Liquid international reserves were depleted, and net international reserves fell to an alarming deficit of USD 10.3 billion. In short, misguided economic policies led to the loss of access to private financing and jeopardized access to crucial multilateral financing,” they added.
With this diagnosis, the Minister of Economy details in the document that public spending is being drastically rationalized through several cuts in poorly directed and inefficient energy and transportation subsidies, public employment, capital expenditures and transfers to provinces and state companies.
According to the International Monetary Fund, total poverty in Argentina has increased to around 45%. EFE/Lenin Nolly. EFE
“Revenue is being mobilized through a temporary increase in export taxes and the tax on access to foreign currencies (country tax), as well as efforts to reverse harmful changes in the personal income tax,” it indicates.
And he adds: “Over time, we will seek to safeguard our consolidation and improve the quality of adjustment, including through reforms that strengthen and simplify the tax system, improve the sustainability and equity of the pension system, and continue to reduce the burden while increasing the efficiency of public spending, including in areas such as subsidies, social programs and infrastructure.”
