Argentina unveils ambitious post-crisis budget with 5.5% economic rebound in 2021

By Walter Bianchi and Adam Jourdan

BUENOS AIRES (Reuters) - Argentina's government is working towards a fiscal deficit of 4.5% of gross domestic product in 2021 and an economic rebound of 5.5%, according to a draft budget sent to Congress on Tuesday, ambitious goals as the country battles recession.

The South American country, which this month emerged from default after restructuring its foreign currency bonds, is likely to see 29% inflation next year, while its peso currency is expected to fall to 102.4 per U.S. dollar by the end of 2021, according to the budget bill.

Argentina's economy is in recession for the third year in a row, with a central bank poll predicting a 12% contraction in 2020. The country remains in the grip of the coronavirus, which has hit Latin American countries particularly hard.

"The budget sets out goals that do not seem easy to accomplish," said Gabriel Zelpo, director of local economic consultancy Seido, who expects this year's deficit to be 7.5%.

"They will have to remove lot of expenditure of COVID-19 programs like emergency income for people out of work and they will have to raise utility bills, all while the government's public approval ratings are going down," he said.

The targets will be especially hard to hit as 2021 is a congressional election year, Zelpo added.

"This budget has two central objectives: to improve and deepen production and create jobs," President Alberto Fernandez said in a public address earlier in the day.

"They are the two obsessions we have. It's what we are working toward and the budget is absolutely consistent with those objectives," the Peronist leader said.

Argentina, fresh from striking a $65 billion bond restructuring deal with its creditors, is now headed into talks with the International Monetary Fund to agree a new program to replace a failed $57 billion agreement struck in 2018.

(Reporting by Walter Bianchi and Adam Jourdan; Editing by Sandra Maler and Timothy Gardner)