This morning, the 2016 budget was published in the Official Bulletin under Decrees 2278 and 2280/2015, officially making it law. Along with the signatures of President Cristina Fernández de Kirchner, Cabinet Chief Aníbal Fernández and Economy Minister Axel Kicillof (who designed the budget) are the outlines of next year’s budget forecast by the current Executive branch.
These include a predicted economic growth of 3 percent, an inflation rate of 14.5 percent and an average exchange rate of 10.6 pesos to the dollar. As far as resources are concerned, the government estimates that national income will increase to approximately AR$1.4 billion. This number will be the result of various taxes, including the income tax: if contributions to social security are included in the mix, the overall income revenue rises to AR$1.9 billion.
In addition, the budget established that the current capital spending will see an increase to approximately AR$ 1.5 trillion. In turn, the total spending in the public sector will add up to a projected figure of approximately AR$1.7 billion, while primary public spending will represent 24.57 percent of the GDP (this percentage is obtained when the national debt’s interests are subtracted from total public spending).
A two-year extension of the Economic Emergency Law, originally passed in January 2002 at the height of the economic crisis, was also approved. Seen as a necessary measure by the administration, many members of the opposition, including the Republican Proposal (PRO), believe the law should return to Congress to be reassessed.
Given the fact that we will see a new administration take the Casa Rosada in December, many question how strictly this budget will be followed from then on. The current outlines suggested by Kicillof were approved in the Senate on October 28th with 39 votes in favor and 28 against. Likewise, since the next government will be facing a different Senate with a different breakdown in party seats, the changes this chamber may want to enact could be very different from the current Senate’s.
The October 25th elections saw the Victory Front (FpV) lose its majority in the Congress but win it in the Senate. So should Scioli win the elections, he would have a hard time getting approval in the Lower House, while the Senate would be a cakewalk: the opposite scenario, obviously, would apply for Macri. In general, passing bills and legislation will become a lot more interesting, and we may see this clearly in possible amendments to this budget.
As if there weren’t enough riding on the 22nd, we’ll just have to wait and see.