The 72-member upper house will debate budget forecasts that envisage 6.2 percent economic growth, consumer prices rising 9.9 percent and a weakening of the peso to 6.33 per dollar by the end of next year from today’s 5.8218. The bill was approved by the lower house on Sept. 26.
“We’re maintaining a managed floating exchange rate and avoiding a currency devaluation, which would have a negative impact on income distribution and internal prices,” Anibal Fernandez, a senator from the ruling Victory Front coalition, said at Congress today. “We’re counting on more private investment that will accompany economic growth.”
Since 2010, President Cristina Fernandez de Kirchner has drained reserves to pay foreign-currency obligations, contributing to this year’s decline of almost 20 percent in central bank funds to $34.7 billion yesterday. South America’s second-biggest economy hasn’t sold bonds abroad since defaulting on $95 billion of debt in late 2001.
The budget’s economic forecasts have been questioned by opposition senators who say the government has underreported inflation and overestimated growth since 2007, when Fernandez’s late husband and predecessor Nestor Kirchner changed personnel at the statistics agency. The International Monetary Fund censured Argentina in February for failing to report accurate data.
In the 12 months through August consumer prices rose 10.6 percent, according to the agency, while a report compiled by opposition lawmakers using statistics provided by private economists put the increase at 25.2 percent.
“This budget is a fantasy, the numbers make no sense whatsoever,” said opposition Senator Sonia Escudero in a telephone interview during the debate. “By underestimating inflation, the government will count on more funds than expected and have the power to arbitrarily allocate them.”
Tax revenue will increase 27 percent while spending will rise 19 percent in 2014 from this year, resulting in a budget surplus of 0.11 percent of gross domestic product, compared with a deficit of 1.77 percent of GDP in 2013, according to the bill.
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