Argentina's 2022 budget bill, presented to the Chamber of Deputies just before midnight on Wednesday, anticipates that the government will curb spending.
South America's second economy expects to register a primary fiscal deficit of 3.3 percent in 2022, down from four percent in 2021, according to an official from the Economy Ministry, who asked not to be identified because the text of the bill has not yet been made available to the public public. The government also revised its inflation forecast for 2021 up to 45.1 percent, up from its previous projection of 29 percent per year.
The government is proposing to cut spending just days after the PASO primary election indicated that the ruling coalition is poised to lose key congressional seats in November's midterms, after getting worse-than-expected results.
The country is also in the middle of talks with the International Monetary Fund to renegotiate a US$-45 billion loan. Early Wednesday, President Alberto Fernández said the budget would include the assumption that an agreement would be reached with the Fund.
Fernández met the September 15 deadline to present the budget amid a political crisis that included several ministers who resigned.
Other points of the draft budget:
- Government expects inflation to reach 33 percent in 2022
- Government expects the peso to close the year at 102.4 per dollar in 2021 and 131.1 per dollar in 2022.
- By 2022, Central Bank financing is projected to be 1.8 percent of GDP
- To cover the remaining needs, it hopes to obtain funds through local debt auctions equivalent to two percent of GDP and loans from international organisations for 1.1 percent of GDP.
- In 2022, energy subsidies are expected to be equivalent to 1.5 percent of GDP
- The government could reduce these subsidies to 0.3 percent of GDP in the medium term through a potential electricity price differentiation plan, yet to be determined.
- The budget does not include plans for a wealth tax in 2022
by Jorgelina do Rosario, Bloomberg