Argentina’s economic growth will slow to 5.1% next year while annual inflation will total 9.2% and the peso will weaken to ARS4.40 to the U.S. dollar, according to projections included in the 2012 budget bill.
Argentine President Cristina Kirchner sent the bill to Congress on Thursday and legislators will likely discuss it next week, when Economy Minister Amado Boudou is expected to appear before Congress.
Kirchner has been governing without a budget since 2010 because Congress declined to approve her 2011 budget. Government officials are confident Congress will pass the 2012 budget, largely because Kirchner is expected to win a landslide re-election in next month’s general election.
Her likely victory is expected to give her broad political capital and tip the balance of Congress in her favor. That would give her ruling Frente Para la Victoria coalition control over both chambers of Congress once the newly elected legislators take office in December.
The budget calls for a continuation of key economic policies, including increased spending on such infrastructure as roads, bridges and power plants. It also calls for continuing social programs, such as those that benefits families with newborn children.
The government expects economic growth to boost gross domestic product to ARS2.085 billion ($496 billion at the current exchange rate), up from an estimated ARS1.77 billion this year. The budget sees GDP expanding 4.6% in 2013 and 4% the following year to ARS2.77 billion.
In what is likely to be a controversial provision, the budget forecasts average annual inflation of 9.2% next year, compared with an estimated 9.9% in 2011.
That contrasts with inflation surpassing 20% annually currently, according to private sector estimates.
The budget sees inflation declining to 8.9% in 2013 and again in 2014.
Meanwhile, the government’s budget forecast puts the average exchange rate next year at ARS4.40, up from ARS4.13 this year. It sees that rate weakening to ARS4.69 in 2013 and ARS5.0 in 2014.
The government expects the expanding economy to push tax collection up by about 23% next year to ARS668 billion. It sees income tax revenue jumping almost 23% to ARS131 billion and value-added tax revenue rising 23.5% to ARS185 billion.
The budget foresees a trade surplus next year of just over $8.5 billion, up from an estimated $9 billion this year.
The surplus is seen declining to $6.86 billion in 2013 while hovering around $6.9 billion in 2014.
Source: online.wsj.com