Argentina: Government floods the market.

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The Argentine government accelerated the economic announcements to try to improve the social mood before the legislative elections in November.

Vice President Cristina Kirchner’s claim in her public letter was to increase spending, taking into account that the social situation was complex.

Economists estimate that the Government would have to spend a trillion pesos per month in the last four months to bring the fiscal deficit to 4%.

Although experts believe that Martín Guzmán, the Minister of Economy, will not enable such a level of expenditures, the Minister of Economy did validate the implementation of some measures that were announced in recent days.

How much each measure will cost

All the measures that have already been taken would mean an expense of $ 26,806 million.

In addition, there are two points that imply resigning tax collection for $ 43,000 million: the increase in the income tax floor and the moratorium project. Next, the expense that each decision represents:

The rise in the vital and mobile minimum wage, which impacts not only on private sector workers, but also on social plans, as well as on minimum pensions, will generate an additional expense of $ 5.517 billion.

The early retirement plan for the unemployed with 30 years of contributions, which will collect 80% of assets until reaching the statutory age, will cost about $ 1500 million, taking into account that Anses (Retirement agency) estimated that 30,000 people will be able to access the benefit this year.

The 25 public works plan announced by the Government will require a total investment of $ 3.114 billion.

The increase in the non-taxable minimum for Income Tax, which raised it from $ 150,000 to $ 175,000, means a fall in tax collection by about $ 15,000 million.

Poverty

Everyone in Argentina knows that all this money injected into the economy will bring more inflation.

The annual variation rate of inflation, annualized, in Argentina in August 2021 was 51.4%.

This high rate is correlated with the high poverty rate that Argentina has been dragging on.

The poverty index was 40.6% in the first half of the year, 1.4 percentage points less than the 42% of the second half of last year and 0.3% below the 40.9% of the period January to June 2020, according to the latest report from the National Institute of Statistics and Censuses (Indec).

Meanwhile, the level of indigence was 10.7% in the second semester, compared to 10.5% in the same period last year.


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