[Economics] Trigger clause in the 2023 Budget: a bid for USD 18,000 million in the middle of the electoral year

[Inkriql]

 

After agreeing to include changes in the 2023 Budget project, the ruling party yesterday obtained the opinion in committee, which enables the treatment and eventual approval on the premises next week. To do this, it incorporated a decisive article that the opposition demanded and that defines, nothing more and nothing less, than the destination of some USD 18,000 million of resources not contemplated in the original text, according to private estimates. The figure arises from the "excess" of projected income by underestimating inflation with respect to market expectations.

In simple terms: the Budget contemplates an inflation rate of 60%, objected to by the consensus of economists and also the opposition. The projected income level is based on that estimate. But the latest survey of market expectations (REM) released by the Central Bank shows an expected inflation of 90% for next year, with which the available resources would grow above what was budgeted. The difference would then be income that the government could handle discretionally, precisely what the opposition wants to avoid in the midst of an election year.

 

According to the figures provided in the Budget project, revenues of $22 billion are contemplated, which implies a difference of at least $4 billion if the inflationary guideline applied were that indicated by the REM. At the average exchange rate forecast for 2023, of $219, the result is a difference of USD 18,000 million, in case the advance in prices is not even higher, as many economists, some of them even close to the minister himself, have already calculated in private. of Economy, Sergio Massa.

It may interest you:

Public accounts ended in September with a slight surplus and the Government managed to meet the fiscal goal with the IMF
Hence, the "trigger clause" included yesterday implies that if the diversion actually occurs, the Executive Branch will have to turn again to Congress to approve the distribution of these additional resources. That is to say, you will not be able to have the expansion of items by decree as it happens up to now.

The new text establishes that if as of August 31 "the inflation rate exceeds 10% of the goal established in the Budget or income exceeds 10%, the Executive Power will send a complementary law." The issue is particularly sensitive in a year in which electoral spending will be permanently under scrutiny.

Of course, not everything that is collected above what is expected can be considered surplus. This is so because the inflationary shock will increase the level of available resources but will also automatically increase the level of spending. A high percentage of public spending is tied to indexation formulas, essentially pensions and AUH, and it is expected that spending on salaries for public sector employees would also be higher.

 

Even so, a considerable economic remainder would remain in the coffers of the Treasury that opposition legislators warn could be applied for electoral purposes. An immediate precedent, even without elections in between, is the $18,000 bonus that the Government granted in April, May and June to informal workers, monotributistas and retirees with two minimum salaries. The measure, designed by the then head of the Treasury Palace, Martín Guzmán, had a cost of $200,000 million which, according to sources from his team at the time, was financed with the additional collection resulting from an inflation rate well above the projected by the former official. It is worth remembering that Guzmán had projected a general price variation of 36% for this year in the 2022 Budget, which, in any case, was never approved.

Both Massa and the opposition aim to avoid repeating that situation and go through next year with the approved Budget. Based on this objective, it is not ruled out that new changes be added to those incorporated yesterday in the Budget and Treasury Commission headed by deputy Carlos Heller, among them the incorporation of the Income Tax of the salary of judges, civil servants and Judicial Branch employees.

 

https://www.infobae.com/economia/2022/10/21/clausula-gatillo-en-el-presupuesto-2023-una-puja-por-usd-18000-millones-en-pleno-ano-electoral/