- Title: New Argentine economic team aims to cut deficit, eyes Jan. debt sale
- Date: 30th December 2016
- Summary: BUENOS AIRES, ARGENTINA (FILE) (REUTERS) OBELISK EXTERIOR OF ECONOMY MINISTER PILAR, BUENOS AIRES PROVINCE, ARGENTINA (FILE) (REUTERS) ELECTRICITY TOWERS BUENOS AIRES, ARGENTINA (FILE) (REUTERS) BILLS WITH NEW TARIFFS FOR PUBLIC SERVICES GASOLINE FUEL NOZZLE AT SERVICE STATION GASOLINE PUMP MARKER MEASURING LITRES PUMPED PERGAMINO, BUENOS AIRES PROVINCE, ARGENTINA (FILE) (REUTERS) COMBINE GATHERING SOY AND PUTTING IN TRACTOR
- Embargoed: 14th January 2017 18:08
- Keywords: Nicolas Dujovne Luis Caputo economy forecast deficit debt taxes 2017
- Location: BUENOS AIRES; LIMA, PERGAMINO AND PILAR, BUENOS AIRES PROVINCE, ARGENTINA
- City: BUENOS AIRES; LIMA, PERGAMINO AND PILAR, BUENOS AIRES PROVINCE, ARGENTINA
- Country: Argentina
- Topics: Budget/Taxation/Revenue,Government/Politics
- Reuters ID: LVA0015F2SQPV
- Aspect Ratio: 16:9
- Story Text: Incoming Treasury Minister Nicolas Dujovne said on Friday (January 30) he would aim to cut Argentina's expected budget deficit for 2017, currently seen at 4.2 percent of GDP, with revenue from a tax amnesty programme and an eye toward lower spending.
In his first public comments since his appointment, Dujovne told a press conference that his main objective would be to continue with centre-right President Mauricio Macri's economic policies, adding that he would aim to reform the country's tax code to lower taxes, while shrinking the deficit and boosting infrastructure spending.
"We will continue with the same programme next year, which is administering this group of objectives of ours: to improve infrastructure, to lower (fiscal) debt, to eliminate taxes. We are eliminating taxes because we are reducing the tax burden on income that parliament just approved. But also (we are reducing taxes because) since we will probably have more resources than what we had planned, what I as interior minister am trying to do-- and it is a decision that all of us on President Macri's work team have agreed to-- is try to improve the fiscal goals for 2017 by taking advantage of this situation," Dujovne said.
He did not give a new deficit target, saying that would depend on how much revenue the government received from a tax amnesty that allows Argentines to pay a fee to declare hidden assets without fear of prosecution for tax evasion.
Argentines have declared $90 billion dollars so far, resulting in government revenue of 82 billion pesos ($5.17 billion dollars), and can continue declaring through the end of March. ($1 dollar = 15.8500 Argentine pesos)
On Monday, Macri fired current Finance Minister Alfonso Prat-Gay, citing differences over management style, and split the ministry into two - a treasury division to be led by Dujovne, former chief economist at Argentine bank Banco Galicia, and a finance division, to be led by current Finance Secretary Luis Caputo.
Both are expected to take office next week.
Caputo said on Friday the administration was considering tapping debt markets in January, citing the recommendation of banks. He added that Argentina needs $22 billion dollars of debt financing for 2017, plus an additional $21 billion dollars of re-financing.
"The financing of this gradual path toward the fiscal equilibrium the president has chosen, establishes that for the year 2020, that debt ratio that today is around 25% (25% of gdp) will end up being 33 or 34% (of gdp). In other words, it will still be less than half of what it is in Brazil, for example, and substantially less than any other Latin American country. So I think that it's very important to underscore this because it is something we are hearing a lot and just as there are things that are said that are concrete, this definitely isn't," Caputo said.
"There is no problem with the sustainability of the debt," he added.
Dujovne is viewed as more of a fiscal hawk than Prat-Gay, whose 2017 budget project included the 4.2 percent deficit target, higher than the 3.3 percent initially proposed.
Macri's deficit-reduction hopes are complimented by an expected increase in public works spending to drive economic growth ahead of legislative elections in October.
Argentina remains in recession one year after Macri came to power and implemented market-friendly reforms, including letting the peso float and slashing grains export taxes.
But inflation, seen ending the year at 40 percent, has curtailed consumers' purchasing power and a promised flurry of foreign investment has failed to materialize.
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