The government will need next year to assume a net debt by about
$38 Billion dollars. That is the conclusion of the 2017 draft
budget presented yesterday by the Minister of Finance, Alfonso
Prat-Gay, before the Congress, which includes a growth of current
expenditure and capital of 22.1%, marking a real increase which is
above inflation estimated 17% in the text. The initiative, which
will begin to be debated in committee next Tuesday, could be signed
into law in late October, if the official outlined schedule is
According to the statistics attached to the draft, net issuance
of securities will amount to AR$ 720 billion, while net debt will
reach AR$ 640 billion next year, equivalent to USD 38 billion. A
relevant fact is that the draft envisages freezing BCRA assistance
to the Treasury: AR$ 90 billion million net additional temporary
advances and AR$ 70 billion profit. It is the same value of 2016,
which implies a reduction in real terms.
According to sources of the Government, one third of the debt
authorized in the bill is intended to cover an estimated deficit of
4.2%; another third would go to the rollover of existing debt;
while the remaining third would be freely available to the
Executive. Of the total 2017 budget, public debt represents 10.5%
and is a value growing 32.4% compared with 2016.
Besides taking debt, other of the items that will increase
compared to this year are the forecasts for public works and
pension expenses. This last point is due to the Historical
Reparation Act retirees, to which the draft allocate almost AR$32
As it had leaked out, the Macri administration projected a
growth of 3.5% for 2017 and a dollar averaged AR $17.92.
Furthermore, it admits that 2016 will close with a fall of 1.5% in
the Gross Domestic Product (GDP).
As for inflation, it appears estimated in a range that goes from
12 to 17%; with a variation of implicit prices of GDP of 37.2% for
this year; and of 19.4% for next year.
Before congressmen of the committee on Budget and Finance,
chaired by Luciano Laspina, Prat-Gay also remarked that the
government will seek "gradual elimination of superpowers,
through an amendment to the Financial Administration Act to be
limiting the edge of the Chief of Cabinet in reallocating budget
In estimating tax revenues, and while an amendment to the Income
Tax is discussed, the bill includes an increase in revenue of 27.9%
for that tax. Still, Finance Ministry sources claimed that in the
estimations of the budget it is considered the fiscal impact of $25
billion that would mean the rise in the tax allowance (MNI) and
changes in the scales that the government is designing. According
to the draft that the Casa Rosada discussed with the governors, the
MNI would rise between 15 and 17%.
In the message of the bill, the Government explains that the
increase in revenue provided by Income Tax is based on the foreseen
increases in the levels of economic activity, prices, wages and
imports, but also notes in the inter-annual comparison the impact
of "the compensation and refunds for payment on account of
consumption abroad ", among others.
In addition, the initiative of the Executive expected that the
revenue from the so-called Tax on Checks will grow 24.9% next year,
which will be explained by "the increase in the amount of
taxable banking transactions".
The draft also foresee that the trade deficit will grow strongly
in the next three years, reaching US$ 4,900 million in 2019.
After listening to the minister, all the representatives of the
Pro ratifies the trustfulness of the bill, while congressman from
Frente Renovador party and economist Marco Lavagna considered that
the macroeconomic guidelines "are achievable", although
considered somewhat "optimistic" inflation forecast to
17%. In addition, the legislator questioned that Prat-Gay
"made no reference to the issue of indebtedness and the impact
of the tariff increase" during his presentation, an issue that
will be at the center of debate next Tuesday, when the bill begins
to be analyzed in committees.
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