Argentina’s Economy Ministry has sent a draft Budget for 2024 to the lower house Chamber of Deputies, in which it projects GDP growth of 2.7 percent and an optimistic inflation rate forecast of 70 percent for the calendar year.
Sergio Massa’s portfolio also says the official exchange rate will close out next year at 600 pesos per US dollar, 63 percent more than projected at the end of 2023.
Regarding the fiscal deficit, Argentina intends to respect its agreement with the International Monetary Fund which sets a target of 0.9 percent of GDP. However, a separate section has been drawn up in the budget which dedicates 4.7 points of GDP to various tax exemptions and tax expenditures. By opening up the discussion and tweaking, the aim is for the budget to leave Congress with a surplus of one point.
With regard to this fiscal year, the bill crystallises a projected fall of 2.5 percent in GDP for 2023, an inflation rate of 135 percent (it currently stands at 80 percent for the first eight months of the year) and has the peso trading at 367 pesos per greenback on the official market.
Sources at the Treasury acknowledged to the Noticias Argentinas news agency that the numbers were cautious, aware that they are almost impossible to predict given the ongoing election campaign and the plans of the future government, whatever colour it may be.
From a fiscal point of view with a view to 2024, the government expects economic activity to improve significantly thanks to higher revenues, in most part due to the extremities of this year’s devastating drought.
In economic terms, the impact of the drought in 2023 is estimated at 0.8 percent of GDP, highlighting that authorities expect a significant rise in revenues from export duties next year. The Economy Ministry also forecasts a significant increase in tax collection.
With regard to trade balance, a substantial improvement is expected in 2024 due to a strong uptick in exports. The Treasury recognises that this will be important and will make the issue of imports much more flexible. However, they recognise that this will depend on the electoral result and the system in which the country finds itself next year.
The bill has entered the Chamber of Deputies and should begin being discussed at committee stage too. Presidential frontrunner and La Libertad Avanza leader Javier Milei has asked Massa to delay debate on the Budget proposal until the election has been decided.