Argentina expects a ‘shock’ due to high inflation in July

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Argentina’s inflation will reach such a high level in July that it will mean a “shock” for the government and will remain at a high level in August, said Thursday a source from the Ministry of Economy, whose authorities were renewed this week to face a crisis.

With an expected inflation of 76 percent, a shortage of foreign currency and poverty close to 40 percent, former Peronist deputy Sergio Massa assumed the economic portfolio on Wednesday and announced fiscal austerity measures and boosting international reserves.

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One way to reduce expenses will be the planned cut by Massa in subsidies for gas, electricity and water consumption, which will mean savings of 500 billion pesos (3 thousand 769 million dollars) per year for the State, although “the full impact it will only be in the 2023 accounts,” said the source.

The management of President Alberto Fernández expects a sharp reduction in spending on energy imports in the last part of the year, while at the same time it will try to make the general increase in wages at least “tie” high inflation in 2022.

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Amid feverish financial negotiations, Argentina will attempt an agreement with the Paris Club countries – to which it owes some 2 billion dollars – “as quickly as possible,” the source said.

Massa, a Peronist lawyer with many contacts with US investors, has become the last hope of the ruling center-left coalition, whose popularity has collapsed due to economic difficulties and fierce internal disputes.

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