Monday April 3, 2023 | 6:02 a.m.
The national government increased during March 2023 the sending of funds to the provinces of the co-participation. The figure, according to a private report, was 2% in real terms, compared to the same period last year.
Estimates indicate that this is how it recovered from the fall that occurred the previous month in the distribution of resources to the districts.
The survey was published by the Center for Argentine Political Economy (Cepa) in the last few hours and showed the real situation of the Government-Province relationship in the distribution of funds, within the framework of inflation and the pressure of the fiscal deficit.
According to the report, the improvement is tied to an increase in the collection of the Value Added Tax (VAT), which is one of the main co-participating taxes.
“The first month of 2023 reflected a slight increase of the order of 0.1 percent year-on-year in real terms. In February, transfers by co-participation in real terms fell 3.3 percent. In March, transfers grew 2 percent in real terms,” said the Cepa report.
The consultant indicated that “VAT exhibited a significant increase of 7.4 percent while Profits fell 3.8 percent in real terms.”
“When considering the situation province by province, it is noted that all of them exhibited an increase in their resources of national origin measured in real terms in March 2023,” the report highlighted.
At the extremes were located Buenos Aires with an increase of 0.2 percent and Río Negro and Santa Cruz with a rise of 4 percent.
“Considering the Coparticipation transfers, VAT collection grew 7.4 percent year-on-year in real terms in March 2023. In the first two months of the year, the result was also positive and is related in all three cases to the increase in activity and consumption in these months”, remarked the report.
On the other hand, in the case of Income Tax, which is the other co-participating tax, March shows a year-on-year drop adjusted for inflation of 3.8 percent.
“The negative performance that began in January (-0.8 percent) in the collection of this tax continues,” the report detailed. Prior to 2023, the real growth trend was 24 months old with the exceptions of June and October 2021.
The Cepa pointed out that “the advances in the payment of this tax, as well as some regulatory modifications have probably had to do with the drop in its collection this month.”
“The economy will grow”
On the other hand, the Secretary of Industry and Productive Development, José Ignacio De Mendiguren, was optimistic yesterday by assuring that “there is no recession” in Argentina, while estimating that “the economy will grow 2%” in 2023.
“I don’t think there will be a recession today because in the last two months the industry has grown, we maintain investment levels and we had a record production of agricultural machinery a few months ago,” De Mendiguren highlighted in statements to radio Con Vos.
In this sense, the official predicted: “This year the economy will grow 2%”, about which he explained: “I measure energy consumption, occupancy level in industrial parks, bad debts in the financial system, which does not exist today ”.
On the other hand, De Mendiguren recognized that inflation “is a complex issue and the main problem in Argentina, and this has an impact on employment and the purchasing power of wages; It is not only a social problem, but also an economic one because there is no market without the purchasing power of wages”.
Given this, the Secretary of Industry pointed out: “With the measures that we were taking to maintain the level of activity, we were able to preserve the level of employment; now we have to go for the purchasing power of the salary”.
Likewise, he considered that “there are two great paths for inflation: an orderly fiscal path, where the variables of economic policy are at stake; and lower expectations.
Regarding the latter, De Mendiguren maintained that although “price agreements are key, if you sit at the negotiating table based on past inflation, you add gasoline to the fire, that is why it is about being able to build a silver bridge until the structural measures take effect.
The Minister of Economy, Sergio Massa, “took the leadership of the economic policy with 7.4% monthly inflation, which, projected, gave 140% per year; but he worked and we reached 4.9%-5.1%, a projection that gives 80%”, the official graphed.
Regarding the poverty statistics officially released by INDEC, De Mendiguren admitted that “they hurt a lot”, but “we must act in two ways: with concrete containment through the Ministry of Social Development, and structurally, attacking the problem in specifically with economic growth”, he emphasized. Finally, he ruled out a possible devaluation, stating that “it is absolute imprudence.”
