Sunday, May 19, 2024

ECONOMY | 18-04-2023 14:02

‘Plan Platita II’? Government to stuff pockets as inflation bites

To mitigate the coalition friendly fire that has been rekindled by the confirmation of accelerating price hikes, Serio Massa’s economic cabinet is drawing up a new programme to stimulate consumption.

It could be in the form of a bonus or lump sum – in any case, there will be a "Plan Platita II" to deflate the anger inside and outside the government over Argentina’s high inflation rate.

The government is ready to put money in people's pockets amid runaway price hikes, which in the first quarter of this year alone reached 21.4 percent, according to the INDEC national statistics bureau – over a third of the 60 percent guideline that the economic team projected for the whole year.

A busy in-tray awaited Economy Minister Sergio Massa this week as he returned from his tour of the United States, where he reaped a US$950-million loan from the World Bank and sought support from the International Monetary Fund and further leniency on national macroeconomic targets.

One of the key items on the agenda is the definition of a broad outline for what is already being called "Plan Platita II." Through the scheme, Massa will respond to the friendly fire that was rekindled last weekend when INDEC revealed a March inflation figure of 7.7 percent.

It is not yet known whether the plan will take the form of a bonus or a lump-sum payment; nor is it known whether it will apply exclusively to state workers or whether it will be extended to all sectors of the population, including retirees.

In principle, according to what has been agreed so far, if it is implemented the payment would reinforce salaries in May and/or June; that is, when the pre-election climate is at its hottest.

Cabinet Chief Agustín Rossi admitted last week that the government is analysing whether to boost the pockets of Argentines.

"Measures are being taken all the time to increase workers' incomes," said Rossi, who refused to confirm if the boost would arrive close to the payment of the aguinaldo mid-year bonus.

Not everyone in the government thinks like Rossi. There are those who are resisting a new “Plan Platita” because of the resistance it could generate from international lending agencies, which demand that money-printing be slowed and public spending be cut. Others in the ruling coalition, such as those close to Vice-President Cristina Fernández de Kirchner, are promoting measures to boost purchasing power, especially as the elections draw nearer. 

If the March inflation figure was harsh, there is ongoing concern in all circles about the dynamics of food prices this month. Some private consultancy firms are already projecting that the first fortnight of April recorded rises of 5.9 percent and, if the curve continues like this, the price of the basic food basket will be in double digits by the end of the month. 

According to data from the Buenos Aires City government, a family of four in the capital needed at least 191,000 pesos in March not to be considered poor, with a family income of less than 107,000 pesos classified as extreme poverty.

by Alejandra Gallo, Perfil


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