Economy Minister Sergio Massa on the day of the primary elections in suburban Buenos Aires, Argentina August 13, 2023. MARIANA NEDELCU/ Portal
Argentina’s Economy Minister Sergio Massa announced Sunday, August 27, the introduction of measures to support consumption, reduce the impact of the peso’s depreciation against the dollar and control inflation, which has exceeded 100% in a year.
“The central goal is that every sector of the economy receives the help of the state in one way or another,” explained Mr. Massa, candidate of power in the presidential election scheduled for October 22 and third in the week, on Instagram last primaries at national level (27%). Measures in the “Program for Economic Activity and Wage Increase” include tax increases, subsidized loans for workers, and vouchers for pensioners and recipients of food aid.
“Argentina has had a loan agreement with the Fund (International Monetary Fund, IMF) since 2018, which in recent days has led to a devaluation of our currency and, moreover, to a drought, the worst in our history, that has damaged our reserves and our accounts , but also had an impact on the financial situation of many families,” the minister recalled.
Argentina is linked to the Washington institution through a $44 billion loan taken out in 2018, which mandates some fiscal discipline in refinancing its debt.
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Galloping inflation
Mr. Massa also announced the creation of a $770 million export pre-financing fund with contributions from the National Bank and the Investment and Foreign Trade Bank (BICE).
Further measures for the agricultural sector come into force, namely the abolition of taxes on the export of value-added products such as wine, rice and tobacco. Fertilizer shipments benefit from the same changes. The government estimates the losses caused by the 2023 drought at $20 billion, almost 3% of the national GDP.
According to analysts, prices rose by 6.3% in a month in July, while inflation in the country reached 115% in a year. And its peso is faltering: the central bank devalued it by 20% on Aug. 14, making it weaker against foreign currencies, particularly the dollar, and potentially adding to inflationary pressures.
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