Monday, May 27, 2024

ARGENTINA | 16-05-2024 00:53

Cabinet Chief Posse predicts 139% inflation as he finally turns up in Congress

Eight-hour debut for Cabinet chief in Congress as he forecasts 139.7% percent annual inflation, a dollar at 1,016 pesos by year-end and defends paralysis of public works projects.

Better late than never – three weeks shy of half a year as Cabinet chief, Nicolás Posse finally condescended to show up in Congress on Wednesday for an eight-hour Senate session to answer questions about the ‘Ley de Bases’ deregulatory reform amid the committee debate.

Given that the National Constitution establishes that the head minister should report monthly, alternating between the two chambers as they go, there was a long backlog of questions – Posse had not shown up in Congress since taking office last December.

Throughout the session, the official addressed a broad range of issues with the economic projections of the Javier Milei government at the forefront. According to the Cabinet chief, the government forecasts that this year will end with an annual inflation of 139 percent, marked by deceleration in the remaining months of year, and the dollar at 1,016 pesos.

Posse, 58, further took aim against the administration of social plans on the part of the picket organisations in the framework of recent court raids and the diffusion of preliminary conclusions, also referring to the presumed "punishments and threats" of a system which he compared to a system of "modern slavery."

Another question tackled, due to the insistent questions of opposition senators, was the halt to public works projects nationwide. Posse bluntly explained that the entire system was under review due to the government inheriting multi-billion debts which had caused most contracts to collapse due to lack of funding.

“We’re not going to finance that by printing money, we are halting hyperinflation,” he elaborated.

The Cabinet chief also crunched numbers from the macro-economic projections of the libertarian administration, following a question from Senator Anabel Fernández Sagasti (Unión por la Patria-Mendoza).

“Annual inflation of 139.7 percent is projected for December, 2024,″ said Posse in relation to consumer price increases. 

"As for the Budget, which has been rolled over, the Economy Minister projects a fall of 3.5 percent for Gross Domestic Product this year. The nominal exchange rate, as measured by the A3500 of the Central Bank with the dollar, is projected to reach 1,016 pesos (58 percent growth this year)," stated the official. 

Posse then highlighted the administration’s achievements, underlining that "we are [moving] in the correct direction." 

He indicated: "The objective was always to lower the deficit towards zero deficit and the surprise we had is that everybody considered it improbable that it would happen in 2024 and reaching December with zero deficit unattainable."

On the contrary, he maintained that not only was this objective achieved but a "surplus" of some four trillion pesos was also reached during the first quarter of the year, he detailed.

At the same time, he underlined that "we are a solvent country with a surplus for the first time since 2008 so we have no need to run up new debts nor to resort to new taxes nor, the worst option of them all, to print money."

‘Ley de Bases’

Posse launched a firm defence of President Milei’s flagship ‘Ley de Bases’ reform bill (also known as the ‘Omnibus’ bill) during his exposure before lawmakers.
Notably, he leapt to the defence of its RIGI (Régimen de Incentivo a las Grandes Inversiones) investment incentives, affirming that they would promote industry and regional economies.

“The investments are awaiting legal security in the regions,” he maintained about the scheme, which rewards those putting down more than US$200 million by exempting them from national and provincial taxes and allowing them to import goods without paying duties.

At the same time he referred to the protests over Fondo Nacional de Incentivo Docente (FONID) teacher bonuses, assuring that the fund had been discontinued because the period established by the law creating it had expired.

During the eight-hour session in which Posse presented his first report, the Cabinet chief received fierce criticisms from opposition caucuses, especially the Kirchnerite wing of the Peronist coalition.

"They assembled a fiction whereby austerity is possible, thus constructing the surplus," assured Senator Juliana Di Tullio (Unión por la Patria-Buenos Aires Province). 

"Notify the President that wages are not keeping up with inflation. People sell dollars to pay their utility bills. They have blown up the middle class, that’s why poverty has gone up. The people are paying for austerity," she added.

Caucus chief José Mayans (Unión por la Patria-Formosa) said: “The Ley Bases is tailor-made for 20 businessmen to do what they like in Argentina. Ah, but the picket with three plans, poor him.”

Senator Ezequiel Atauche (La Libertad Avanza-Jujuy) defended Posse’s presentation.

"We have brought in people who know how to manage things and that hurts them. I understand them because they’ve been around for 20 years and they don’t know how to manage anything but their time is up,” he said, pointing the finger at the Peronist ranks.

“The Argentines are fed up with their lies,” concluded the libertarian.



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