MercoPress. South Atlantic News Agency

Argentine opposition describes budget bill as “inconsistent and false”

“Who are the real holders of the GDP tied bonds?” asked lawmaker Lozano

The Argentine opposition strongly criticized the budget bill sent to Congress and questioned the real growth of the economy during the current year, wondering who are the real holders of sovereign bonds tied to GDP growth maturing later this year.

Broad Progressive Front (FAP) lawmaker Claudio Lozano said on Friday that the 2013 budget bill sent to the Lower House on Thursday is “inconsistent and false” because it does not allow space for discussion on taxation.

“What is being mentioned is that what’s being spent will rise some 16% and if that was the truth we would be experiencing a significant process of adjustment and it’s pretty clear that that is not the case.

“The same was said for this year and the truth is that we are to end up with a much higher cost,” Lozano said.

The statements made by the national deputy for the FAP caucus added him to the list of politicians and economists who criticised the budget bill presented by Economy Minister Hernán Lorenzino on Thursday at Congress.

Furthermore, Lozano said that the government initiative “does not allow” the opposition to discuss taxation in Argentina nor the logic of economic policies being applied by the government.

Lozano and a second opposition lawmaker and former central bank president, Alfonso Prat Gay also questioned the estimated growth of the Argentine economy for 2012, which was revised down to 3.4% from 5.1%.

The two lawmakers pointed out that reporting growth above 3.26% in 2012 when it was actually less, triggers payments and “means the central bank will have to pay out over 3 billion dollars to cancel bonds tied to GDP growth”.

“The cost of inflating growth has precise beneficiaries, and when we say we are growing when we are not growing, the government is committed to pay 3.5 billion dollars for the GDP Coupon when they should not be paying them. The big question thus is who are the holders of these GDP Coupons? asked ironically Lozano.

Opposition lawmakers also blasted the fact that Economy minister Lorenzino in his presentation “in no moment said a word about inflation (estimated at 10.8% in 2013 and currently running at a floor of 24%), not even the evident stagnation of the economy in the first half of the year. He talked about the solvency of Argentina’s foreign accounts when it is a known fact that in the last four years over 80 billion dollars fled the country, and also highlighted the alleged solvency of government spending when the financial deficit this year is well above 58 billion Pesos”.

During the presentation of the 2013 budget bill Minister Lorenzino put relief on the debt policy impulse by the national government, affirming that “debt is not a variable that puts the solidity of our macro-economy at risk.”

According to the budget bill, the trade surplus this year should reach 12.25bn dollars with exports totalling 82.3bn and imports of 70bn. The fiscal deficit following cancelling of maturing debt is estimated in 35.6bn Pesos, but for 2013 the government anticipated a financial surplus of just over a billion Pesos.