Falling in love with the backward dollar and going overboard with the chainsaw, the two risks that the Government faces according to Marina Dal Poggetto and Daniel Artana

Falling in love with the backward dollar and going overboard with the chainsaw, the two risks that the Government faces according to Marina Dal Poggetto and Daniel Artana
Falling in love with the backward dollar and going overboard with the chainsaw, the two risks that the Government faces according to Marina Dal Poggetto and Daniel Artana

Economic analysts view with concern the economic data that the Government shows as favorable. The exchange rate delay and the fiscal impact of the recession are the most worrying elements. This is what economists put it Marina Dal Poggetto and Daniel Artana within the framework of the event on “Provincial Public Finance: challenges and opportunities” that AdCap held together with the Alvear Palace Hotel.

The director of the consulting firm Eco Go said that the president Javier Milei showed data from the first quarter to demonstrate the fiscal surplus and not March, “a month in which the drop in collection is very strong as a result of the recession that the government needs to lower inflation.”

The economist pointed out that “the Government of Javier Milei is carrying out a much more pragmatic and unorthodox program than what it said during the campaign.”

He also highlighted the importance of facing a micro program, a macro program and guaranteeing governability. And he emphasized the importance of addressing the problem represented by the high level of tax evasion in Argentina and analyzing a pension reform.

For Dal Pogetto “governance and the micro program are still a big question mark.” And he assured that what is observed is that he is carrying out a heterodox program at the macro level.

“It devalued with exchange controls and strengthened them, closed the economy and increased the PAIS tax. Likewise, it does not accelerate the crawling peg with an inflation figure that, according to our calculations, will be around 9% annually for April and controls prices relatives,” described the economist.

However, he warned that a great inconsistency is that “the adjustment being carried out is very harmful in fiscal terms.”

On the other hand, he maintained that the exchange rate: sustained by foreign trade (in reference to the CCL) and with a crawl of 2% it is also worrying. “Today they have the exchange rate scheme as an inflationary anchor,” said Dal Poggetto.

Daniel Artana, director of FIEL, pointed out in a similar sense, who warned that “the Government should not fall in love with some populist elements, such as the backward dollar.”

Likewise, he pointed out that the finances of the provinces evolved worse than those of the nation.

“This is because the provinces have three sources of tax revenue: their own, automatic rates and discretionary transfers,” he explained. I consider that the income of the provinces has been very bad, mainly as a result of the cut in co-participation, which fell 18% and discretionary transfers also lost sharply.

And he explained, on the other hand, that the provinces have provisional expenses, but low compared to salaries as a percentage of total expenses.

This means that the liquidation of pensions, which greatly reduces national government spending, does not have the same effect for governors, he explained.

Thus, both economists agreed on the risks involved in an excessive and disorderly cut in spending, the problems of governability and the “addiction to exchange rate lag.”

For Artana “You have to apply 4% monthly for the crawling peg so as not to waste everything you have achieved so far.”

 
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