Guzmán has delayed his trip to Washington and is preparing details of the new ‘surprise income’ tax

Economy Minister Martín Guzmán will fly to Washington tonight

The Minister of Economy, Martin Guzman, postponed to this evening the trip to Washington which will lead him to participate in the spring meetings of the International Monetary Fund (IMF). The official was a good part of Easter weekend in Chapadmalalon the coast of Buenos Aires, trying to finish sketching out his plan to create a new tax regime that captures “windfall revenue” that has generated complaints in some sectors. Financing a kind of IFE aimed at transferring resources to vulnerable sectors is the aim of the scheme.

The Minister of Economy will be the protagonist these days of a series of meetings within the framework of the Assembly of the IMF and the World Bank. In addition, he will organize a series of bilateral G20 meetings, certainly focused on the impact of the Russian invasion of Ukraine on the world economy. Around the middle of the week, the secretary for strategic affairs of the presidency will arrive in Washington, Gustavo Belize. The President of the Central Bank, Miguel Pesceopted for virtuality at the last minute and stayed in Buenos Aires.

But beyond the forced trip, the priority of the last few hours seems to have been another for the official constantly questioned within the ruling coalition and confirmed on many occasions by the president. Alberto Fernandez. On the long weekend on the coast, Guzmán continued his program of distributing income and charging “unexpected rent”, which drew criticism in the countryside and other sectors, to pay some kind of social assistance, like the IFE.

The IMF's spring meetings will, more than anything else, revolve around the economic impact of Russia's invasion of Ukraine.  Ludovic Marin/Pool via Reuters
The IMF’s spring meetings will, more than anything else, revolve around the economic impact of Russia’s invasion of Ukraine. Ludovic Marin/Pool via Reuters

The postponement of the trip to the United States shows the eagerness to define the collection and redistribution scheme that the minister has in mind. So much so that it sparked speculation of an announcement taking place today, which was however denied by sources from different branches of the national government. Preparing the new extraordinary tax or contribution is not easy, official sources explain, so it would have no chance of being completed so quickly.

The envisaged IFE would be a reduced version. The three who were paid in full restriction due to the Covid-19 pandemic reached around 9 million people. This version will probably not only have a new name but should also reach a smaller number of beneficiaries.

That’s not the only thing the chef of the Palacio de Hacienda is working on. Guzmán also stepped forward on a key issue last week, the holding of the public tariff hearing, called by the Secretary of Energy, Dario Martinez. In short, Guzmán is determined to strictly enforce what he said in a TV interview: “we will negotiate with people who are aligned with this economic course.”

A few days ago, Robert Feletti, Secretary of Commerce, blamed the inflation on Guzmán and warned that “it’s going to get ugly.” The minister responded by saying that Fernández would negotiate with those aligned with the economic program. Since then, rumors of replacements within the firm have intensified.

The truth is that beyond his recent trip to Brazil and the call for public hearings, there have been no other energetic announcements from the Economy. Nor related to controlling inflation. Besides Feletti, another “encouraged” by Guzmán is a new civil servant, the Secretary of Agriculture, who only took office last January. Guzmán acknowledged that the establishment of a mechanism for the “redistribution of unexpected income” is being studied and Matthias Lestani He went through it saying that “the agricultural sector could not capitalize on the concept of windfall income”. Today, Lestani’s boss also defended the pitch.

KEEP READING:

The Brazilian recipe: can Argentinian inflation be contained with Cardoso’s strategy?
Martín Guzmán goes to Washington: what is the Minister’s agenda at the annual meeting of the IMF
As inflation-linked debt burden mounts, government faces $1.2 trillion in local market maturities in a month and a half

Leave a Comment