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Fiscal policy will have election impact in Argentina

Thursday, February 9, 2023

Significance

Fiscal adjustment was mainly driven by the fall in primary expenditure implemented by Economy Minister Sergio Massa in the second half of the year. This strengthened his position within the divided ruling coalition, the Frente de Todos (Front of All, FdT).

Impacts

  • Fiscal adjustment measures will raise social turmoil and reduce the electoral chances of the FdT.
  • Higher spending could drive inflation, increasing poverty and social protests -- and also undermining the government’s electoral prospects.
  • High inflation and falling real incomes could give the next administration a window of opportunity to implement pending structural reforms.

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