The Minister of Economy Luis Caputo assured that inflation, whose official index will be known next Thursday, will be below 5%and anticipated that in the event that Congress approves the Bases Law, the Government will roll back the increase in the rate of PAIS tax from 17.5% to 7.5% for imports, which it had implemented as part of the initial package of measures.
“I think not much more than two months ago you asked me if inflation was going to reach single digits in the second half of the year. We were in March. Well, it hit single digits in April. Then they said, ‘no, but it can’t go below 7%’. Well, it’s below 5 percent. And that is the most important thing we can give to people. Inflation is essential for recovery, because that generates a normality that You haven’t seen Argentina in a long time“said the head of the Treasury Palace in an interview with LN+.
In that sense, he said that “the ideal” would be for disinflation to be complemented with the approval of the omnibus law in Congress. “We all know that the law is good. The opposition knows that the law is good. As I said the other day in a talk, that is the reason why they don’t vote for it. Precisely, the reason why they don’t vote for it is because it is good. And the opposition today is with a single objective, I am not saying the entire opposition, which we already know is with a single objective, which is try to overturn the government“, Shooting.
“Everything we have said that we said was going to happen, happened. He says that it is better that it be the Bases law and the tax law, but that the government can continue governing without the Bases law. I always said it, it is much better that the Bases law passes, it is for the Argentines. Always I suspected they weren’t going to pass it. That’s why he had put together an economic program prepared to combat that. And in fact we were in fiscal balance in month one. And I also said at the time that I was raising the PAIS tax to combat this, because if not, they were going to have us trapped,” he noted.
“I also said it was going to be short-term. And they said, no, ‘they’re going to fall in love.’ Once they put a tax in Argentina, they don’t take it out again. It’s going to be like the tax on the check. Well, the president already announced it the other day. The law is approved and we are going to roll back that tax increase. We are going to lower it from 17.5 to 7.5 percent. Then the Argentine cost will drop sharply. That will probably be a new step down in the level of inflation. Because the PAIS tax is a huge hump,” Caputo asserted.
The minister assured that the economy showed “signs of recovery in several sectors in May: incomes and retirements are also being restored. In May the economy turned around.” He mentioned in this regard that last month the production and sale of cars increased 5% and that mining activity also grew.
He also refuted Alfonso Prat Gay’s recent assessment that the economy has entered a hyper-recession, based on what the drop in check tax collection indicates.
“There is something that is being eaten,” he said about the comment of the former Minister of Economy of Mauricio Macri’s government. “On May 25, we published a communication in the Official Gazette and rescheduled the due dates of the check tax, there are $140,000 million that passed from May to June, with which the decrease compared to last year was 8% (not 25%). as Prat Gay had indicated). Furthermore, Caputo explained, the year-on-year drop in collection in April had been 15%, so the 8% drop, although it was still a negative variation, confirms that “the drop has turned around.”
Here is a summary of the minister’s statements throughout the interview:
- The Base Law, which includes the labor reform, the tax chapter and labor money laundering, aims to speed up the recovery in the labor market.
- May inflation will be below 5%. Not much more than two months ago I was asked if inflation was going to reach single digits in the second half of the year. And it reached single digits in April.
- Lowering inflation is essential for recovery, because this generates a normality that has not been seen in Argentina for a long time. Ideally, this would be complemented by the sanction of the basic law.
- Part of the opposition has only one objective, which is to overthrow this government. For a good sector of politics, luckily not for all, politics is a business.
- If the basic law is approved, we are going to roll back that increase in the Country Tax, we are going to lower it from 17 and a half to 7 and a half.
- The country risk, until this unbridled political attack, was at 1,200 points. And if the law passed, we would already be at 1,000.
- The AUH against inflation rose 90% in real terms, almost doubled in real terms.
- Politicians have to be more responsible and vote for laws so that people can return to the private sector as quickly as possible.
- We did not set a date to lift the trap. What we are looking at is a strategy to get out of the trap. Essentially four conditions have to be met. One is fiscal balance. Two, having the problem of inherited stock solved, having solved the flow and finally, that there is a reasonable relationship between reserves and remunerated liabilities.
