The Government continues to review numbers and evaluate measures after the
leap into the void that the negotiation of the fiscal adjustment in Congress meant.
Without the support of the governors, the Minister of Economy, Luis Caputo, is preparing a
further cut in spending to compensate for the fall in the fiscal package
provided for in the omnibus law and reach the "zero" financial deficit agreed with the Monetary Fund.
"If we are going to give up income,
naturally we are going to have to reduce expenses, it includes the Nation and income as well.
It is everything that makes up the fiscal package, we are going to withdraw it, we will evaluate new measures and we will try to reach a consensus on them with governors and legislators in the future" , the official said on Friday at a press conference from Casa Rosada.
This is a different roadmap than the one he presented in December when he launched a battery of announcements, and without the political support - immediately - that he had promised both the White House and the IMF.
For this reason, according to sources from La Libertad Avanza, the Executive is studying
a new tax bill for later.
Tomorrow there could be news at the meeting of the ruling bloc.
In parallel, Economy began to review items ranging from
discretionary transfers to the provinces to subsidies on rates and retirement benefits.
The objective is to counterbalance the reversal in the increase in withholdings, the increase in the income tax floor and money laundering, as well as the shipwreck of the new pension formula in the omnibus law.
In total, almost 2 points of GDP.
Caputo set out to eliminate the financial deficit, which last year ended up being 6.1% of GDP, almost one point above the 5.2% predicted by the minister.
This result, caused by a primary deficit of 2.9% and the jump in debt interest to 3.2% due to the indexation of peso bonds to inflation and the dollar, adds greater difficulties to the government.
In this context, the minister's announcement on Friday
generated uncertainty and disorientation among some governors and allied blocs
.
No wonder: the provinces could lose a fund of almost $2 billion, which are the discretionary resources they receive from contributions from the Treasury, national programs, funds for pension funds and public works, among others.
The district that would be most affected in the event of a cut in those funds that run outside of the co-participation is the province of Buenos Aires.
Caputo will have
more power with the Ministry of Infrastructure
under his orbit, after the displacement of Guillermo Ferraro.
They could also freeze the advance of the co-participation distribution and raise the fuel tax.
Another key item will be subsidies.
Tomorrow will be the second hearing to define the new electricity rates and the transporters will present their claims,
while on Thursday the increase in transportation and gas rates of up to 600 and 250%, respectively, should come into effect.
The Government must still define the removal of subsidies, which could increase rates even further.
Retirements would also be reached by "plan B" of the fiscal adjustment, since the current formula (which takes salaries and collections from previous months) allows for lower salary expenditure.
Caputo wanted to do it with a mechanism adjusted for inflation, without considering the month of January, because the current system - they say - is harsher, although if inflation falls, the reduction in the deficit would be reversed.
Although the Secretary of Finance, Pablo Quirno, was in charge of ratifying over the weekend that "
the objective of zero financial deficit remains immovable"
, some economists - even including the minister - see it as increasingly unlikely to achieve the desired balance.
Future disbursements depend on this goal, such as the US$ 4.7 billion that the IMF would approve this Thursday.