The Place Where 60% Inflation Is A Good Thing

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Some countries in the world will celebrate if annual inflation hits 60 percent next year. Argentina is one of them. In the recently approved annual budget, Economy Minister Sergio Massa indicated that he expects prices to rise by that amount next year, despite expectations that inflation will exceed 100 percent this year. Even an official report grouping the estimates of the central bank-accredited consultancy puts inflation next year at 91.3 per cent, slowing to 72.2 per cent in 2024. According to the bill which was recently passed by the Chamber of Deputies and will make its way to the Senate – which is controlled by Vice President Cristina Fernandez de Kirchner – GDP should expand by some 2 percent, while the fiscal deficit is about 2 percent of GDP. It will be reduced from 2.5 percent to 1.9 percent, which is in line with the IMF programme. The official peso-dollar exchange rate is expected to come in at 219 pesos.

Still, the Argentine political class should celebrate that it has the budget. Last year, while Matrine Guzmán was still in charge of the economy ministry, talks broke down when deputy Maximo Kirchner lashed out at the opposition by criticizing the public debt restructuring with the IMF, a cornerstone of President Alberto Fernández’s economic plan. This time around, Maximo, seen as a placeholder for his mother Cristina, remained silent, only to come to the chamber to vote in favor of the plan. Yet the hardest-hit area of ​​Máximo and the pan-Peronist Front de Todos is waging a silent (and sometimes not so silent) war against the president, as they seek to distance themselves from the governing coalition they have built.

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While the president dreams of re-election and the Kirchnerites seek to control the 2023 electoral agenda, Massa was playing his game. After an early victory that led to the Ministry of Economy, the La Campora political organization, run by Mrs. Fernández de Kirchner and her son, gradually began to oppose his policies. Namely, they criticize the loss of purchasing power (largely a direct result of inflation) caused by the relatively weak stance against “concentrated economic forces” in Kirchnerite lingo. Massa, who said he would not run in 2023, was brave enough to take over the economy ministry because of a political calculation that could leave him with opportunities next year. Given his age, he could even sit it out. But the real issue is that he has lost the real support of Christina and her fanatics, which was his real political asset. It remains to be seen whether it can continue to wait it out or try to launch a stability plan to tackle inflation which will be painful and unpopular in the immediate term. And then it has to work before the election.

In the opposition coalition, Juntos Por El Cambio, broadcasting dirty laundry has been the name of the game for some time. In this case the Coalition Bloc led by the Civic Radical Union (UCR) voted in favour, while the Pro Party—founded by former President Mauricio Macri and headed by Patricia Bulrich—did not participate in the force majeure effort. The internal squabble between the PRO and the UCR has a second derivative being fought within each party, with the Hawks and the Doves battling it out. The fragmentation of the opposition coalition is seen as one of the few ways the current ruling party can retain pink house,

Therefore the political sphere of Argentina remains as fragmented as ever. With the economy warming and inflation at 100 percent a year, it seems our leaders are more interested in 2023 than anything else. Maybe they’re forgetting that we still have to get there.

Credit: www.forbes.com /

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