“Santa Claus does not exist,”says former Central Bank governor Federico Sturzenegger when criticising Previaje, a policy already used by over 4.5 million Argentines – including his own family by his own account.
That Santa Claus is a fantasy is known to everybody who has outgrown childhood. But heterodox, creative and innovative public policies in favour of the people, jobs and industries are a very concrete reality and highly necessary in contexts of crisis. And that should be known by anybody who is, has been or aspires to be an official in our country.
Sturzenegger’s criticisms are a series of dogmatic denunciations taken out of context which do not consider the weight of the tourist sector in the national economy nor its capacity as a strategic tool for emerging from the current crisis. The main error of his column is to analyse a public policy reaching millions of people from a class perspective bordering on the egocentric, which does not permit him to see the positive impact achieved by Previaje.
Tourism in Argentina creates over a million jobs, represents around nine percent of the Gross Domestic Product and prior to the pandemic was in fourth place as a complex bringing hard currency into our economy. An industry of such weight deserved a policy like Previaje: innovative, disruptive, efficient in the use of public funds and profoundly federal.
Let us therefore break down the measure in question with concrete data. Previaje was an original policy departing from the traditional scheme of subsidies and transfers. Thanks to such wage assistance programmes as ATP and Repro, crucial during the worst stages of the pandemic, tens of thousands of companies and jobs could be preserved. Previaje arose on the back of that fundamental assistance to mobilise private savings (over 85 billion pesos which families had frozen), inject liquidity, lend certainty and put companies back to work. At the height of the pandemic, the hotels took reservations, airlines sold flights and travel agencies offered packages. Previaje not only upheld thousands of PyMES (small and medium-sized companies) in the sector during the worst crisis ever in the history of tourism produced by the Covid-19 pandemic – it also achieved extremely rapid job creation nationwide in the sector to face a summer season which promises to be record.
Previaje promotes formal employment doubly, both through pre-sales and the use of credit, in an economic sector with more informal jobs than most, permitting the state to increase its fiscal revenues from the sector and recover much of that 50 percent paid out.
In terms of economic impact, it must be borne in mind that every peso spent by the tourist spins off a multiplier effect in economic production, to contribute 1.57 pesos in terms of gross production value, 0.88 pesos in terms of gross added value and 0.32 pesos in revenue, according to simulations by an input-output matrix methodology.
Following the logic of that matrix, if we add the initial expenditure in the concept of advance purchases by tourists (70.21 billion pesos after discounting IVA value-added taxation) plus the costs of the credit provided by the state (35.105 billion pesos, also after deducting IVA) we obtain a total of 105.315 billion pesos in spending. This totals a revenue of 35.275 billion or 83 percent of the fiscal cost of the programme, which is around 42.5 billion pesos. To express it in simple and clear terms, for every 100 pesos invested by the state in Previaje, it recovered 83.
Over and above the fiscal and tax merits of Previaje, another virtuous circle of this programme is that most tourists came from Buenos Aires (City and Province), Santa Fe and Córdoba, accounting for 83 percent of the advance purchases under the programme. In contrast, the destinations Río Negro, Tierra del Fuego, Santa Cruz, Mendoza, Misiones and Neuquén netted 55 percent of the advance purchases while representing only 11 percent of those setting out.
This territorial redistribution is reinforced when we observe that the spending on credit mainly occurs during the vacation, thus making regional economies more dynamic and the funds provided by the state more federal. In this way Previaje implies a phenomenal transfer of funds from the major urban centres to regional value chains, creating job opportunities for youth where they live.
I would like to dwell on a fundamental point of this policy. Previaje has permitted millions of compatriots to go on holiday. We know that because they write by the thousands to thank us for the opportunity conveyed by this benefit via social networks, email and telephone. But it was also a decisive incentive for broad swathes of the middle and upper middle classes who habitually go on vacation in Uruguay, Brazil or the United States to opt this summer to travel to the marvellous destinations which our country has. That not only implies economic recovery with travel destinations enjoying 100 percent occupancy in much of the country with jobs created. That also means billions of tourist dollars remaining in this country when it is so important to look after our reserves in this context in which Argentina is renegotiating the gigantic debt to the International Monetary Fund contracted, paradoxically enough, by Sturzenegger’s government.
Previaje is definitely the most important policy in history for the tourist sector. That is recognised by companies and by provincial governors, whatever their political loyalties, while celebrated by tourists who flock massively to use it. The World Tourism Organisation (UNWTO) has proposed it while countries in the region, like Ecuador and Peru have also requested our technical collaboration to replicate it.
In this sense I appeal to Sturzenegger’s intellectual honesty, inviting him, when he goes on holiday in Argentina together with his family with the benefit of Previaje, to talk to the protagonists of this story: the hotelkeepers, the owners of travel agencies, the tourist guides, restaurant waiters, artisans selling their regional products in local markets, asking them all what they think of Previaje. He will be surprised, or maybe not.
Santa Claus does not exist, Federico, that’s clear enough. But a smart state protecting and promoting a strategic industry for the future of our country can and must exist. It’s all about being realistic but creative, understanding the restrictions, yet not to fall into paralysis but to keep our wits about us, working with a private sector which is investing seriously, using public funds in a responsible and virtuous way, looking after Argentine jobs and fundamentally, loving our country.
* Tourism & Sports Minister in the national government.