Argentine minister proposes an agreement with the opposition to set an economic course for 10 years

The Minister of Economy of Argentina, Sergio Massa, highlighted the need for the Government and the opposition to agree on long-term State policies, when formally presenting the 2023 Budget in the Chamber of Deputies.

“We have to agree, Government and opposition, on a course for ten years,” the minister told the legislators.

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After considering the importance of Congress “setting a roadmap,” the head of the Palace of Finance assured that the conflict in Ukraine “costs Argentina US$4.9 billion” due to the increase in energy prices, which forces the country to import it in the winter period.

Thus it happened that “in July the fiscal overflow was 12.4% primary. When there is no roadmap, what ends up happening is that whoever has the greatest capacity for pressure or influence when defining spending is the one who manages to impose, within the operation of the Executive, his idea or his objective over another,” explained Massa.

In a context in which Europe is facing “the biggest recession known since World War II,” the Minister of Economy indicated that the global economic downturn “suspended for Argentina the possibility of accessing some benefits that strengthened the goals of accumulation of reserves.”

In that sense, “the granting of a transfer loan for US$6.2 billion that was agreed with Russia was suspended and the expansion of the Chinese ‘swap’ for US$9 billion was suspended.”

Given this scenario, “geopolitics ended up having an impact in terms of multilateral operation,” so that “the war has cost the country US$20 billion,” he said.

GOALS

During his speech, the minister reiterated that the four priorities of his management are fiscal order, trade surplus, strengthening of reserves and development with inclusion.

In this context, the 2023 budget, which Massa defined as “prudent and realistic”, projects a 2% increase in gross domestic product (GDP) growth, a primary fiscal deficit of 1.9% and average inflation of 60% by 2023.

The project also contemplates a growth in exports of 7.1%, due to the incentive that the mining, knowledge economy, agricultural and mining sectors will provide.

The Ministry of Economy also forecasts a growth in investment of 2.9% of GDP, thanks to the push of tourism, construction —because the level of public investment is sustained and private investment grows—, and the telecommunications industry, since “in February Argentina puts out the 5G tender,” Massa announced.

Tax pressure, meanwhile, will fall 0.18% next year.

During his appearance, the minister said that the assistance from the Treasury to the Central Bank will continue to be reduced, for which “a dynamic of sustainable indebtedness” is necessary.

INVESTMENTS

“The total investment portfolio with international financing, within the framework of the agreements we have, amounts to US$119 billion between provincial and national loans,” Massa observed.

In the mining sector, there are committed investments of more than US$6 billion for 2023-2024, with the expectation that the country’s exports may reach US$23 billion dollars, in which lithium will play a fundamental role.

In a context of rising prices, the current management also intends to reduce energy costs, in part thanks to the completion of the first section of the Néstor Kirchner gas pipeline, located in the province of Neuquén (southwest), which constitutes the second largest non-reservoir conventional gas and the fourth oil.

“We understand that the completion of the gas pipeline will allow us to save more than US$2.3 billion on energy imports,” the minister informed.

For the first time since the return of democracy in 1983, the Chamber of Deputies voted against the planned budget for 2022 in December last year, which led the Executive Branch to extend it by decree.