Argentina should modify how it distributes consumer subsidies by making more direct cash transfers to the poor to avoid giving wealthier Argentines a free ride, according to an advisor to presidential front-runner Daniel Scioli.
A new government could cut a fiscal deficit estimated to end 2015 at 5.9 percent of GDP by making sure that only qualified citizens receive financial assistance, Gustavo Marangoni, president of Banco de la Provincia de Buenos Aires said in an interview Friday.
“It’s always better to subsidize demand rather than supply,´´ Marangoni said in an interview in Buenos Aires. ‘‘It’s better, for example, in transport to subsidize the passenger because if subsidies arrive directly, it’s much more reassuring. It’s unfair for someone to receive something they shouldn’t even if the original intention is good.”
If he becomes president, Scioli, the candidate for President Cristina Fernandez de Kirchner’s Victory Front alliance in October’s election, will seek to build on a recovery from the 2001 economic crisis by concentrating on infrastructure to improve Argentina’s transport networks in the agricultural heartlands,
Energy subsidies introduced by Fernandez are eating into Argentina’s foreign reserves after the nation posted an energy trade deficit of about $6 billion in 2014, or about 1 percent of GDP. It had run surpluses for at least 20 years until 2011.
Investors who are concerned that Scioli won’t guarantee legal protections should look at his track record as governor of Buenos Aires province, Marangoni said. Since taking office in 2007, Scioli had no problems with foreign companies, Marangoni said.
“Don’t concentrate too much on what Daniel says right now,” Marangoni said. “Focus instead on what he did in the province of Buenos Aires. Did he govern with a surplus? Yes.”
Scioli, who named Carlos Zannini, one of Fernandez’s closest advisers as his running mate last month, had 36.9 percent of intended votes against 31.6 percent for opposition candidate Mauricio Macri in a Management & Fit poll taken June 22-26. The nationwide survey of 2,400 interviews has a margin of error of 2 percentage points.