Improving conditions for businesses to thrive, compete and create quality jobs, while investing in skills of and opportunities for people should be high on the policy agenda. Economic hardship triggered by past macroeconomic crisis and by the pandemic has aggravated economic inequalities and highlighted the need for more effective social protection, including for vulnerable households whose livelihoods are outside the formal labour market.
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2021 Structural Reform Priorities
After falling sharply this year, GDP is projected to expand by 3.7% in 2021. Rising macroeconomic imbalances and prolonged lockdown measures weigh on domestic demand and limit the pace of the recovery, despite a successful restructuring of public debt with private creditors. Employment has fallen strongly. Monetary financing of the high fiscal deficit is putting further pressure on inflation and the gap between the official and the parallel exchange rate. A gradual lifting of confinement measures will allow some recovery of private consumption, but investment will remain weak until imbalances are addressed.
Bold and timely measures have been taken to contain the pandemic and support households and firms, but they have raised the already high fiscal deficit. Reducing macroeconomic imbalances will require prudent fiscal policies and changes to monetary and exchange rate policies. Efficiency gains in public spending and revenue raising, including through a review of special regimes, exemptions and loopholes in the tax system, would improve the fiscal position. Expanding conditional cash transfers is key to reduce poverty and support incomes, including for informal workers.
Significant reforms have been undertaken since 2015 to strengthen growth and well-being, as reported in the 2017 OECD Economic Survey of Argentina. Access to international capital markets was restored, the credibility of national statistics was re-established and social protection was enhanced while cutting back on ineffective spending. A tax reform, a new competition law, improvements in the sustainability of the pension system, new legal frameworks for capital markets and for public-private partnerships, the creation of a new independent fiscal council and a commitment to strengthen the independence of the Central Bank followed.