By Agrositio. 22/12/2020 | 16:12
So far this year, the Central Bank of the Argentine Republic transferred to the Treasury a total of $ 1,959,720 million ($ 407,720 million in Temporary Advances and $ 1,552,000 million in Profit Transfers). Until November, $ 1,759,720 million had accumulated. Simultaneously, the primary fiscal deficit reached $ 58,693 million in November, and if we add the interests, the financial deficit amounted to $ 127,029 million. Thus, so far in 2020, the total tax red is $ 1,905,505 million.
In 2020, the fiscal accounts deteriorated sharply. The financing source that prevailed this year was the assistance of the BCRA through Transitory Advances (AT) and Transfers of Profits (TU). Health care and assistance expenses, added to the rate freeze and the government’s inaction to reduce superfluous public spending, explain much of the current deficit.
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Diego Piccardo, Economist at the Libertad y Progreso Foundation explained that “Argentina, unlike other countries in the region, does not have the possibility of financing extraordinary expenses resulting from COVID-19 by borrowing from the voluntary debt market, as Peru did. little by placing 100-year debt at a rate of 3.23%, unthinkable for our country. ”
Furthermore, the economist added that “the practically complete monetization of the fiscal deficit brings about a devaluation of the purchasing power of the peso. The expectations that Argentines have for next year do not generate confidence that the peso can maintain its value, since the Minister Guzmn has already stated that he plans to finance 60% of the deficit with monetary issuance. This factor leaves the budgeted inflation of 29% for 2021 as a simple wish of the Minister “, he concluded.
The specialist assures that the international financial market “remains closed” since they will only be willing to lend us at very high rates (close to 17% in dollars), so that the only debt that the government can take is in the local market, indexing the capital to the evolution of inflation (CER) or to the official dollar (Linked dollar). It should be noted that the local financial market is small compared to the needs of the treasury.
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Until the rulers show a free commitment to fiscal equilibrium, Argentines will seek to defend their savings in foreign currencies that fulfill the role of value reserve, or in durable goods.
Source: Freedom and Progress
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