Tax changes, wage increases, tariff increases, and other recommendations the Fund made to the government



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While the recommendations team report the Fund, which accompany the evaluations of the executive board are not mandatory for the countries that access the credit of the multilateral credit agencyindicate that, in case of having to recalculate the actions, tends to favor the suggestions of the entity presided over by Christine Lagarde. An example of this was the application of export deductions mentioned in team report October, which was eventually implemented before negotiating the second agreement.

In general terms, the IMF indicates that future priorities should include "a less distortionary tax system, a more balanced system of labor market regulation, greater competition in domestic product markets, lower barriers to trade and foreign investment". However, it is highlighted in the document, they should be considered in such a way that the Government is not exposed to a loss of political and social consensus.

Among the specific recommendations, the Lagarde team technicians stressed the importance of "resisting the pressures to maintain energy subsidies and raise wages."

According to the document shared yesterday, "the authorities will need apply the regulatory framework to pass on the effects of the depreciation of the peso to consumers of electricity and gas"Otherwise, remember that avoiding doing this this year has resulted in additional cost to the government equivalent to 0.1% of GDP.

On the revenue side, the Fund considered it important to establish a 25% cap on pay increases during the period June 2019 through June 2020. This is due, they explain, to the fact that the 2019 Budget leads to a 34% salary increase as its basis, and the agreed 14% increases to be applied between December and February have left that level of margin.

In addition, Washington stresses the importance of having a plan out of the short term in terms of public policies. "In the future, include a description of the measures to be implemented in the medium term and submit them to Congress in conjunction with the annual budget strengthening the credibility of the medium-term budgetary procedure ", team report.

The recommendations included in this report are not necessarily an advance of the measures that the Government will take in the future, but are possible guidelines established by the IMF. Some of them at least is what should be considered, given the precedents of withholdings, as the foreground should economic conditions deteriorate again.

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