Fiscal sustainability and State reforms are topics that are frequently discussed. Fiscal sustainability refers to maintaining a certain trajectory over time, but it also has a political component. This means considering how much the political system is willing to support adjustment measures to achieve equilibrium. This support can come from various branches of government, including the Executive, Congress, or the Judicial Branch. On the other hand, State reforms aim to eliminate obstacles and regulations that may hinder the functioning of the economy.
Regarding Argentina’s fiscal sustainability, it is believed that the fiscal consolidation being achieved is sustainable, mainly due to strong support from the President. Historically, the burden of fiscal responsibility in Argentina fell on the Minister of Economy, but now there is a shift towards broader political support. The future challenge lies in improving the quality of fiscal adjustment, which will be aided by approval of the fiscal package in Congress and an anticipated economic recovery.
Improving the quality of fiscal adjustments is a priority, as mentioned by the IMF. This includes addressing the fiscal deficit by reducing public spending efficiently and responsibly. Restoring the Income Tax, which was previously eliminated, will help finance the fiscal adjustment more equitably, leading to an overall improvement in quality.
In terms of achieving structural fiscal balance, it is seen as a necessary step for Argentina. The government’s focus on eliminating the fiscal deficit has required certain sacrifices, such as reducing public works and delaying payments. With a potential economic recovery and restitution of the Income Tax, the country can maintain a balanced budget without resorting to excessive spending cuts.
While fiscal sustainability is crucial for regaining credibility in the capital markets, Argentina has faced challenges in maintaining policy consistency when changes in government occur. Overcoming these challenges will require successful policies that lead to economic growth and stability, thereby increasing credibility and trust in the country.
Argentina’s potential return to international capital markets and negotiations with the IMF are separate issues. It is believed that securing support from the IMF is crucial for implementing the necessary economic reforms to achieve sustainable growth. Additionally, improved international liquidity management and reduced country risk will pave the way for future market access.
In conclusion, Argentina is on a path towards fiscal sustainability and economic recovery, with key reforms and support from international organizations like the IMF playing a crucial role in achieving long-term stability and growth.