MercoPress. South Atlantic News Agency

CFK instructions for the day after: public spending cap of 20% for 2012 budget

In spite of Feletti’s 5% forecast, the budget estimate for next year is 4%

Argentina's 2012 budget bill aims to cap public spending growth at 20%, below current rates of more than 35%, as state expenditure surges ahead of the October presidential election, according to a newspaper report on Monday.

The populist government of President Cristina Fernandez, CFK, who looks almost certain to be re-elected, must submit its budget bill for next year to Congress by September 15.

Financial daily El Cronista said Economy Ministry officials informed different ministers that spending growth should not exceed 20% in 2012, adding that government departments would then be able to seek extra funds to cover basic needs.

Argentina's budgets in recent years have reported modest inflation, growth and revenue, allowing the government to spend “additional” income without congressional oversight.

Last year's budget bill, which was never passed by the opposition-controlled Congress, estimated that total primary spending would jump just 17% this year.

El Cronista, which cited a source close to Treasury Secretary Juan Carlos Pezoa, said the 2012 budget bill forecasts inflation of less than 10%.

Previous budget bills have also estimated inflation at a similar level despite sharp criticism from opposition lawmakers and private economists, who say true inflation is running at more than 20% as the recent minimum wage agreement, (up 25%) confirmed.

El Cronista said the budget would estimate growth next year of 4%, below the 5% forecast recently by the Deputy Economy minister Roberto Feletti. Growth this year is estimated at more than 8% as it continues to benefit from a domestic consumption boom and strong demand for its exports of grains and manufactured goods.

Consumer confidence is close to a record high and unemployment, officially at 7.3% in the second quarter, is at multi-year lows.