The pursuit of fiscal sustainability and state reforms are at the forefront of discussions in many countries. Fiscal sustainability refers to maintaining a consistent path over time, but it can also be politically influenced by the level of support from various branches of government. State reforms, on the other hand, aim to eliminate obstacles and regulations that hinder economic growth.
In Argentina’s case, achieving fiscal sustainability requires strong support from the President for fiscal measures and deficit elimination. The challenge for the future is to improve the quality of fiscal adjustment through Congressional approval and economic recovery. Restoring the Income Tax will help make fiscal adjustment more equitable and improve its quality.
The concept of fiscal sustainability raises questions about the reversibility of measures, as past reversals have contributed to Argentina’s lack of credibility in capital markets. In order to regain trust, successful policies that lead to economic growth and stability are necessary.
The pension system in Argentina is undergoing changes, with room for further reform in the future. Accessing international capital markets by 2025 will depend on successful economic policies and a positive relationship with the IMF. Additional funding from the IMF should not be used for exchange rate interventions but rather to build reserves and reduce country risk.
Despite recent market uncertainties, the Federal Reserve’s monetary policy stance remains unchanged. Economic recovery in the US is stable, which bodes well for emerging markets like Argentina. Exiting stock markets and adopting a flexible exchange rate regime could further support economic recovery and growth.