Argentina presents austere budget for 2019

BUENOS AIRES: Despite anti- austerity street protests, Argentina’s government presented a tight budget under pressure from the International monetary Fund to achieve fiscal balance.

“For the first time since 2009, we’re presenting a balanced budget,” Finance Minister, Nicolas Dujovne told parliament.

“Converging towards fiscal balance is a central objective of the government’s economic policy.” Argentina’s economy is struggling due to the currency suffering a crisis of confidence having lost around half its value against the dollar this year alone.

The country’s primary budget deficit has dropped from 6.0 per cent in 2015 to 3.9 last year and is expected to reach 2.7 this year, according to the government.

“Sustainability in the public accounts is vital to maintain economic order,” added Dujovne.

“Fiscal solvency is also necessary to reduce the economy’s vulnerability.”

In order to calculate the 2019 budget, the government is counting on a reduction in inflation from an estimated 42 per cent (45 according to the private sector) this year to just 23 per cent next year, while predicting that the economy will shrink 2.0 per cent in 2018 and 0.5 per cent in 2019.

It’s based on an exchange rate of 40.10 pesos to the dollar, compared to the actual rate of 40.36 on Monday. It began the year at 18 but after losing 6.81 per cent last week to pass the 40 barrier, it recovered slightly on Monday, 0.32 per cent.

Earlier this month, President Mauricio Macri announced a series of austerity measures to try to get the freefalling peso under control, but that only led to an increase in protests and a further drop in the currency’s value.

Argentina negotiated a US$ 50 billion loan from the IMF earlier this year, receiving an initial tranche of US$ 15 billion in June. — AFP