With the difficult mission of reversing the crisis that is plaguing Argentina, lawyer Sergio Massa took over the newly created “super-ministry” of the Economy on Wednesday night (3) and should announce a package of measures to try to give the country financial stability. which is going through a difficult exchange rate and inflationary situation.
The long-awaited “Mass Plan”, as it has been called by the Argentine press, will take place around 7:30 pm (Brasília time) and is expected to be based on two main points: review of social spending and strengthening of the Central Bank to bypass Argentina’s debt.
If the measures follow this line, the package would mark a pro-market nod by bringing fiscal adjustment to the center of economic policy.
According to the newspaper La Nación, Massa should announce a reduction in social assistance plans, which represent 1.9% of the country’s GDP (Gross Domestic Product). Another expected measure is the cut of subsidies for electricity and gas – which would increase the final price for consumers.
The prioritization of fiscal adjustment would signal the new minister’s alignment with Argentina’s pact with the IMF (International Monetary Fund). In January 2022, President Alberto Fernández confirmed the agreement that, among other things, sets the fiscal deficit target at 2.5% of GDP in 2022.
The way there would involve the immediate rebuilding of the Central Bank’s reserves, which currently has almost no dollars in cash. For this, the Massa Plan must involve different strategies, such as increasing incentives for agriculture and the export sectors —which are one of the main gateways for reserves for Argentina—, and attracting investments from international organizations, such as the IDB and the World Bank.
Massa is also expected to announce a program to encourage the hiring of people who receive government social benefits; the advance payment of income tax for some large companies, from April 2023 to 2022 —which, according to the newspaper Clarín, could generate revenue of 200 million pesos—; and the definition of a special regime for debt securities to be used as currency to pay tax debts
With these measures, the government hopes to regain confidence in the Argentine economy, control inflation, which can reach 90% a year, and stop the dollar’s soaring in the parallel market.
However, the challenges of the new holder of the portfolio will not be restricted to the financial environment. The minister was also raised to the post to help contain growing popular dissatisfaction and stem part of the political crisis gripping the country.
As highlighted by Clarin, Massa’s arrival in the economy is the result of a political crisis. President Alberto Fernández and his deputy, Cristina Kirchner, are fighting a power struggle within the government itself. In this tension, Cristina has prevailed. It was from her that Massa was nominated for the super-ministry, which earned its name for aggregating the Economics, Productive Development and Agriculture and Fisheries portfolios — which were independent.
In practice, according to analysts, Massa should act as a kind of prime minister, answering directly to Cristina — a situation that illustrates the president’s current cornering.
For some members of the ruling coalition, the new economic head is seen as President Alberto Fernández’s last chance to face the government’s loss of popularity and politically survive until next year’s presidential election.
The timing, however, is not just bad for Fernández; Cristina also goes through turmoil. This week began the final phase of the trial that investigates irregularities in the period in which she was president of Argentina (2007-2015).
In the first of nine scheduled hearings, she was accused by prosecutors of creating and leading an “extraordinary matrix of corruption” alongside her husband, Néstor Kirchner (1950-2010), during the period they ruled the country.
This troubled political context will not be left out of the office of the superminister, who will be the third to hold the position in less than a month.
