The OECR headed the policy of the economic reform of the Argentina government, headed by Havier Miley, although he recommended the country to conduct a financial reform that is suitable for “distorting taxes”, gradually suppressing subsidies. All this is for the country to finally consolidate its taxation.
According to the club of the most industrialized countries, Miley would make an “ambitious reform program”, which “pays for its first fruits”. In this sense, they encourage the “maintenance of the impulse” of these changes in order to restore confidence in the country, simultaneously contributing to investments and performance.
However, since the Libertarians came to power at the end of 2023, Argentina’s economy is experimenting with numerous fluctuations. Difficult reductions in state expenses and financial reforms forced the country to feel negative growth as in 2023 and 2024. But the economists with whom they consulted from Electoomista.es in Argentina predicted that the country would suffer as recovery in “V”, which, according to the visible, will happen according to the OECD document.
In particular, they expect that this year about 5.2%will increase, and this next year is closed by 4.3%. Similarly, inflation, the great structural problem of the country, will continue to correct 2025 for 2025, and the one that reaches the annual rate of 15%. In 2023, the inflation of the year -on therapeutic inflation was 211.4%, which is the highest in the world.
“Argentina reached unprecedented fiscal consolidation, but she needs to adapt her fiscal policy to maintain a medium -term tax course, while in the style of potential growth,” said Luis de Mello, the country’s countries, at the OECR country, at the press conference of the submission of the report together with the secretary -Secretary of Argentina Pablu.
Thus, in order to establish a fiscal system of consolidation of the country of Rilathens, Mello recommended those who were responsible for the country’s economic policy, “continuous gradual elimination of subsidies and increasing the efficiency of the public sector, while replacing taxes with the extension of the tax base for income and consumption”.
According to the report, Argentina has a very complex tax system, which in many cases provides for these indicators of market distortion, which intend to finance the increase in state expenses constantly from previous governments. “These taxes have influenced consumption and investment decisions, as well as the distribution of resources in the economy,” says the authors of the document.
In order to be able to put a solution, they recommend that alternative sources of income, such as extending the income tax base. In addition, they also propose to reduce or eliminate tax benefits and reduce tax rates for additional value (VAT). Thus, they will receive additional income.
On the other hand, experts emphasized that there are “significant imbalances” between the resources used by the provinces of the country, and the expenses that they have. Keep in mind that Argentina has a territorial model similar to Spain’s model, in which the state transfers resources in the province, the equivalent of autonomous communities in Spain.
These imbalances that arise in the regional governments lead to a complex system of intergovernmental translations, and that is why OECD experts are asking the central government to encourage the provinces To participate in efforts to consolidate fiscal consolidation And to comply with financial rules, since there are two that have not yet entered the car of reforms, without accepting the rules for controlling expenses.
In the document, they emphasize that the reforms that Milei has still made “improved the business -climate, but more progress in this direction will help increase the growth of productivity, which has slowed over the past decade.”
Argentina registered an excess of the budget almost every month of 2024, which has not been noticed since 2010. Excess reached 1.8% of GDP in 2024 compared with a deficiency of 2.9%, registered in 2023.
“Narrow places in the infrastructure, the complexity of the fiscal system and the duration of judicial procedures increase costs and reduce competitiveness. Improving the regulation and reduction of obstacles for trading increases competitive pressure and incentives for companies for more efficient work, ”experts announces.
As for the labor market, the OECD warns that the rules Excessive restrictive increase in registered employment And it can limit the access of employees with less performance in the formal sector. Currently in Argentina, informal employment affects 42% of the active population, according to recent data from the International Labor Organization (ILO).
To solve this problem, it is proposed to reduce the high tax burden on the work, which in Argentina is about 44%, which acts as an important obstacle to formalization of labor, especially among workers with the lowest level of qualification.
The report also proposes progress in the reform of the pension system, which encourages the creation of registered employment. It also emphasizes the need to strengthen education and labor training so that families can improve their insert and receive income in the formal market.
Despite these difficulties, the business environment still has opportunities for improvement. The OECD increases the need to continue to eliminate obstacles to entering domestic markets, especially in the sectors of the services, and the introduction of an independent competence body, as was considered in the current legislation. It also recommends expanding the possibility of studying mergers, even those that do not exceed the installed thresholds to increase the effectiveness of the competition system.
Finally, in order to move to a more dynamic business environment, the agency offers to reduce tariffs, especially with respect to delivery and capital goods, it gradually eliminates export retention, more flexible for foreign capital stops and simplify administrative procedures for entrepreneurs and new companies.
