Nicolás Dujovne

MINISTER OF TREASURY

Argentina 2018  I  Economy  I  Leader

BIOGRAPHY With a BSC in Economics from the University of Buenos Aires and a postgraduate degree from the Instituto Torcuato di Tella, he has worked previously as an economist for Citibank Argentina, Alpha, Macroeconómica and Banco Galicia. He was also a World Bank consultant and Chairman of Nicolás Dujovne & Asociados consultancy company.

“WE RESPECT INSTITUTIONS AND PRIVATE PROPERTY, AND WE WANT THE WORLD TO WITNESS OUR POTENTIAL AND TAKE PART OF THE DIFFERENT INVESTMENT OPPORTUNITIES THAT OUR COUNTRY HAS TO OFFER.”

CAN YOU TELL US MORE ABOUT THE MAIN STRUCTURAL CHANGES BEING MADE BY THE GOVERNMENT IN THE ECONOMY?

The main structural changes this government has put forward are two: correcting inherited disequilibriums, which would have led us to a crisis, and adopting a whole new vision of the economic potential of our country. In this vision, investment and integration with the rest of the world are key components to achieve sustained growth. Regarding the first aspect, stabilizing the economy by reducing inflation, lifting capital controls and solving international conflicts that isolated the economy from capital markets were crucial. Economic subsidies to the domestic consumption of energy, for example, are also being reduced. While being unfair, by benefiting substantially more the accommodated classes of our society, they had an excessive burden on public spending. On the other hand, we have eliminated distortive taxes on certain exports which inhibited growth in agricultural sectors. Regarding fiscal spending, we are focusing it in expanding infrastructure, with a special emphasis on transport works, and enhancing the quality of social spending.

THE REDUCTION IN THE PUBLIC DEFICIT IS A MAIN PRIORITY WITH AS ONE OF ITS MAIN PRIORITIES. WHAT IS BEING DONE TO ACHIEVE THIS OBJECTIVES?

We have signed this agreement with the Provinces because we think that Public Administration as a whole must reduce public deficit. Provinces and local Governments, as well as the National Government, have to be prudent on how we administrate fiscal resources. We need to work together with the Provinces and local Governments to achieve fiscal stabilization. We are already putting an end to an unsustainable fiscal situation and we decided that the reduction in the fiscal deficit would be gradual. This decision has to do with the fact that we also inherited important deficits of infrastructure and social debts: almost one third of our population lives in poverty. I would like to mention a fact that supports the gradual path chosen by the government: 2017 is going to be the first year in more than a century in which the economy growths, inflation is reduced, primary deficit as a share of GDP shrinks, public spending decreases in real terms and the tax pressure is reduced.

WITH THE NEW GOVERNMENT, ARGENTINA REACHED IN 2017 AROUND 17% OF ITS GDP IN INVESTMENTS AND IS AIMING AT 20% TO GROW THE ECONOMY ABOVE 4%. WHAT IS THE GOVERNMENT’S PLAN TO IMPROVE ECONOMIC GROWTH?

In order to take new investments, the private sector values stability and clear rules of the game, which allows them to know the scenario they will be facing. Our country has failed to provide this in its recent past. We have this as one of the main goals. Reducing inflation and regaining access to international capital markets were very important in this respect, but it goes beyond these two concrete measures: we have to make sure these reforms will be sustained in time, for which a consensus on its importance has to be reached. 

Lifting distortive tax burdens on competitive sectors of our economy affected its profitability and therefore lowered investment. The momentum in investment can be seen in the rates of growth of the construction sector, which has been growing at annual rates beyond 10% since March. A last aspect I would like to mention is the increasing participation of private and public partnerships. We estimate that including these, public spending in infrastructure would reach 3,5% of GDP in 2018, up from 2.5% in 2017.

WHAT ARE THE KEY OBJECTIVES OF THE TAX REFORM BEING IMPLEMENTED? 

The objective of the tax reform is to have a simpler, more equitable and more efficient tax system. At the present time, we have some distortive taxes that we plan to eliminate gradually and replace with more efficient ones. We seek an investment-oriented tax policy reform that boosts employment. Furthermore, we know that currently our economy stands a high tax pressure, while one third of the taxes are evaded. This results in an unfair situation, in which those who pay absorb all the costs of those who don’t. This is the reason why the new tax system will encourage tax compliance.

 

WHAT WOULD BE YOUR FINAL MESSAGE TO FOREIGN INVESTORS INTERESTED IN INVESTING IN ARGENTINA?

 

Argentina has begun a serious process of political transformation, leaving aside all the populist practices that were pushed by the previous administrations. This process was consolidated on the recent primary elections, where our political coalition prevailed at national level. This makes us realize that society not only accepts the changes, but also supports this plan, which encourages us to keep working every day pursuing a better future. Consequently, a new and promissory scenario appears in Argentina. We respect institutions and private property, and we want the world to witness our potential and take part on the different investment opportunities that our country has to offer.