(Bloomberg) — The Argentine government projects prices rising 60% next year, a much lower rate than private economists estimates of over 100%, according to Economy Ministry officials who asked not to be named to discuss the 2023 budget proposal before it’s published.
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The budget, the first under Economy Minister Sergio Massa, offers a view into his economic vision during an election year and a test of his political capital as a veteran lawmaker. Congress rejected the 2022 budget draft on the grounds it wasn’t realistic, a setback for President Alberto Fernandez that forced his government to muddle through this year with an extended version of the budget from 2021.
Officials warned that if this budget proposal wasn’t passed by congress, it would create a government shutdown as the 2021 budget would be insufficient for next year considering higher inflation levels.
Projecting 60% inflation by the end of next year contrasts with private economists forecasts of 84% during the same period, according to the central bank’s monthly survey. Many economists see inflation surpassing 100% by the end of this year or early next year too.
Beyond inflation, the budget forecasts 2% economic growth and an official exchange rate at 269 per dollar by the of 2023. Economists surveyed by the central bank see the official rate at 298 per dollar over that time.
The key fiscal deficit projection in the draft — 1.9% of gross domestic product — coincides with targets already established in Argentina’s $44 billion agreement with the International Monetary Fund. Massa concluded a week-long trip to Washington on Monday, earning praise from IMF Managing Director Kristalina Georgieva.
Officials anticipate that the government will lower the primary deficit to 1.9% from this year’s target of 2.5% via further reducing subsidies on transportation and utilities, as well as more domestic sourcing of energy to ween off costly imported natural gas.
Both the government and Argentina intend to conclude the second review of the program in the coming days to unlock an IMF disbursement to Argentina that will cover a $2 billion payment the nation owes the creditor from a previous loan.
Argentina’s 2023 budget projections
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