The new Argentine Economy Minister, Sergio Massa, was released this Wednesday in office looking for a change of course. With the intention of correcting the public accounts, he promised "fiscal order", meeting the deficit target of 2.5% and reorienting the battered public accounts.
Among the measures announced, he proposed cutting energy subsidies and limiting financing via issuance, one of the causes of inflation above 60%. The idea is to take advantage of tax revenues and private financing that can be achieved. It will also seek to increase foreign exchange reserves that are at the limit - those that can be used immediately are around 4,000 million dollars - encouraging exports.
"The challenge is enormous and although the difficulties are many, the global context can become a huge opportunity for Argentina," he said after being sworn in. Nicknamed "super minister" for all the areas he will command (finance, production and agriculture) he said he was "no super nothing, not a magician or a savior", pointing out that what he brings is hard work.
Massa called for all sectors to come together and work to resolve "the double face of Argentina, which grows at 6% per year and creates jobs, but has a huge lack of confidence in its currency, spending disorder, gaps in public investment and an enormous injustice in the distribution of income".
The great objective is to meet the primary deficit target -before debt payment- of 2.5% included in the budgets and agreed with the IMF in the current 44,000 million program. In one of the measures to cut spending, it was confirmed that hiring in the Public Administration and state companies is frozen.
The minister ruled out a devaluation of the peso to gain competitiveness. "The only thing that the devaluation shocks produce is poverty and an enormous transfer of resources," he said. Prices are the great front. "We have to face inflation with determination because it is the greatest factory of poverty that any country can have," he said. .
To finance the system, the support of the Central Bank to the Treasury will be stopped and new agreements will be sought with international institutions of the order of 1,200 million dollars. In this sense, a "productive" meeting was held with the IMF, committing to comply with the debt payments.
One of the great measures would be to limit energy subsidies. It will impact some 9 million homes, which could see their electricity bill triple. Some 4 million will lose the subsidies after not registering in a registry or for having declared high income in the process, while another 5 million will have the help capped. Gas rates will also increase.
In the chapter of reserves, the idea is to enter some 5,000 million dollars in two months thanks to facilitating exports, improving current conditions, since they have to sell at an exchange rate lower than that of the parallel market. Without further details, he pointed out that special benefits would be given to agriculture, hydrocarbons, mining and fishing.
In other measures, social plans will be reordered, aid to households with lower incomes, which will be audited and suspended if conditions are not met.
