News Latin America The Argentine Chamber of Deputies approves the 2023 Budget with an inflation...

The Argentine Chamber of Deputies approves the 2023 Budget with an inflation outlook of 60% and 2% growth

After last year’s parliamentary defeat, the Argentine ruling party overcame this Wednesday the most difficult obstacle for the 2023 Budget. After more than fifteen hours of debate, the Chamber of Deputies approved the Government’s project this morning by 180 affirmative votes, 22 negative and 49 abstentions. The Budget shows that the Executive of Alberto Fernandez foresees a complex horizon for a year marked for the presidential elections in October: the growth estimate is 2%, half of the 4% forecast for this 2022, and the inflation is 60 %, which means a certain reduction compared to the current 83% but still through the roof. The bill now goes to the Senate for final approval.

The legislative session left a bittersweet taste in the Executive of Alberto Fernandez. The Lower House rejected one of the articles that had generated the most debate: the payment of taxes by the Judiciary. “It is definitely incomprehensible,” Fernandez said this morning after hearing the result of the private vote, which resulted in 134 negative votes and 116 affirmative votes. Successive governments have unsuccessfully tried to eliminate the privilege enjoyed by judicial personnel by being exempt from paying profits, a tax paid by workers with higher salaries. As on other occasions, the Supreme Court had ruled against the new attempt to equate the taxation of judges and prosecutors to that of other workers in Argentina.

The 2023 Budget designed by Minister Sergio Massa’s economic team estimates total spending of 29 trillion pesos (about 180.1 billion dollars) with a primary deficit of 6.3 trillion pesos (about 39.1 billion dollars).

Deficit target of 1.9%

Said result, according to the project, is compatible with the deficit reduction agreed with the International Monetary Fund as part of the restructuring of 44,000 million dollars of debt. Argentina committed to closing 2022 with a primary deficit of the national public sector of 2.5% and 1.9% in 2023.

The opinion contemplates increases in the quotas of medical insurance, of social works for the highest categories, higher tariffs for electronic goods, a new tax on plane tickets and tax deductions linked to education.

As part of the negotiations to carry out the project, the Frente de Todos included a clause that stipulates that if as of August 31, 2023, accumulated inflation exceeds the annual goal by 10% or if public revenue exceeds the budgeted amount by 10% , the Executive must send “within 30 days an expansion of the Budget, not being able to do so by decree.” This clause is key after the distortion in recent years between official forecasts and actual figures. The previous budget, for example, estimated inflation at 33% by 2022, but it is on track to triple. For 2021, the predicted CPI increase was 29% and it actually climbed to 52%.

Together for Change, the main opposition bloc, voted divided. The legislators of the Radical Civic Union who supported the Budget argued that rejecting the bill for the second consecutive year gave the Government discretion to reallocate parliamentary allocations by decree in an election year. In addition, they considered that the macroeconomic goals were more realistic than those presented to the Lower House last year by the then Minister of Economy, Martin Guzman.

The legislators of the Republican Proposal (Pro), the party to which former minister Mauricio Macri and the current mayor of Buenos Aires, Horacio Rodriguez Larreta, belong, abstained. Civic Coalition, the third leg of the great opposition coalition, chose to vote against along with the ultra-liberal party La Libertad Avanza.

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