Argentina you will not need a new version of the emergency check payment relief implemented last year in the midst of the pandemic, according to a senior government official, which would eliminate a threat looming over the country’s weak fiscal position.
This year, the Argentine government is working on a base scenario in which national circulation will not be restricted due to the coronavirus pandemic as it was last March, at the beginning of the confinement, said the official, who asked not to be identified because the talks are private. While some trade restraints were recently put in place, as cases approached October highs, these were milder than the 2020 full lockdown.
Avoiding the strict limitation of circulation will reduce the need to implement another installment of the subsidy program for vulnerable sectors, including the unemployed and independent workers, known by its acronym IFE (Emergency Family Income), the person said. A spokesperson for the Ministry of Economy declined to comment.
In its heyday, before gradually being dismantled, the program provided almost 9 million Argentines, or about 20% of the country’s population, a monthly payment of 10 thousand pesos (US $ 116) for three months. IFE payments help to understand why the Government reported on Wednesday a primary fiscal deficit, which excludes interest payments, of 6.5% of gross domestic product in 2020, much larger than the gap of 0.4% in 2019.
The IFE subsidy is not included in the 2021 budget, but some government officials have said its resumption would depend on the progress of the virus. Argentina reported a total of 1,831,681 cases of COVID-19 and more of 46 thousand deaths. In the last days of December, the country began its vaccination campaign, having administered more than 240 thousand doses of the vaccine so far Sputnik V.
Without the check payment program, the government expects to reduce the primary deficit this year to 4.5% of GDP. Reducing the deficit a bit will be a central part of the pending agreement between Argentina and the International Monetary Fund. The South American nation owes the IMF around US $ 45,000 million and the new pact under negotiation is expected to describe a general economic plan of which the government has not given details.