Argentina’s government projects 4% growth and 33% inflation in 2022

RIO DE JANEIRO, BRAZIL – The Argentine government projects economic growth of 4% and inflation of 33% in 2022, according to the budget submitted to Congress on Wednesday (15) after a day marked by crisis in president Alberto Fernández’s cabinet.

The budget bill, which must be passed by Congress, excludes capital payments to the International Monetary Fund (IMF) for a US$44 billion debt still pending renegotiation. On September 22, Argentina must pay the IMF US$1.9 billion in principal and another US$1.9 billion in December.

The draft submitted by Economy Minister Martín Guzmán establishes a primary fiscal deficit – which excludes the payment of maturities – of 3.3% of Gross Domestic Product for next year.

It also estimates that the currency will trade at a rate of 131.10 pesos per USD by the end of 2022, almost 30% above the current rate of around 103 pesos per USD.

The draft budget was presented at the end of a day of political tension after the electoral setback in last Sunday’s legislative primaries, which led to the resignation of 5 ministers and other high-ranking officials on Wednesday.

As for inflation, the budget outlined by the government hopes to achieve a marked decrease with respect to 2021, which accumulated 32% between January and August and is estimated to close this year at around 45%.

The budget is based on a strong increase in revenue collection (+46.7%) with respect to 2021, foresees a reduction of subsidies in the energy sector and an expansion of public spending in the areas of science, technology and education.

With respect to economic growth, which plummeted by 9.9% in 2020, the budget foresees an increase of 4%, half of what was projected for 2021.

Other projections forecast 4.6% growth in consumption, 6.6% in investment, 7.5% growth in exports and 9.4% in imports.

In recession since 2018, Argentina is undergoing an economic crisis that was aggravated by the Covid-19 pandemic with 42% of its 45 million inhabitants in poverty.