From increased subsidy spending and lower harvesting due to droughtthe public finances recorded a primary deficit of 203,938 million dollars in January – without calculating the interest on the debt -, with an increase of more than 1,000% compared to last year.
The data was known this Wednesday in the middle of the journey of a official delegation in Washington to negotiate with the IMF a new disbursement of 5.3 billion dollars, for which, among other points, the objectives for the fourth quarter of 2022 and the projection for this year of the fiscal result will be revised.
According to the Economy Ministry, no investment income linked to the issuance of Treasury bills was reported in January. And the financial shortfall was $537,969 million if you include that the payment of $334,031 million in debt interest, which is up 143% annually.
As for collections, the public sector reported $1.7 trillion, a 92.4% year-on-year increase, lower than January’s 98.8% inflation rate. Tax revenues were driven by VAT net of refunds (103%), income taxes (104%) and social security contributions and contributions (101%), as well as personal assets (320%).
“However, this behavior has been influenced by the severe drought that has a strong impact on the yield of the main exportable products, causing a sharp decrease in the collection associated with the nation state’s foreign trade taxes,” Economía reported.
Export withholding taxes rose by 41.1% in January, following an 11.7% drop in exports, the most pronounced contraction since December 2020. While import duties increased by 63.8%, amid stockpiles and foreign trade restrictions.
As for the spentthe public sector disbursed $1.9 trillion, an increase of 111.2% due to economic subsidies in energy and transport (133%)the salaries of civil servants (116%), the expenditure for public works (151%) and for social interventions (415%).
On the contrary, family allowances (9%) and non-contributory pensions (47.6%) grew below inflation, thus registering a real decline.
“From the point of view of maximum resource savings, the most significant real decline was that of old-age and contributory pensions, equal to 4.3%‘said Nadin Argañaraz, head of Argentina’s Institute of Fiscal Analysis (IARAF).
“Compared to previous months, the year-on-year increase in real primary spending in January implies a change from the six continuous decreases seen in the second half of 2022,” Argañaraz said.
According to the IARAF, a primary fiscal deficit of 0.13% of GDP emerged from income and expenditure. “Therefore, given the 1.9% of GDP target for the full year, the government needs to run a deficit of 1.77% of GDP over the next 11 months,” he added.
The economy minister is trying to consolidate the fiscal front with the aim of reaching the end of the year with a primary deficit of 1.9% agreed with the International Monetary Fund (IMF) for this year, above all in the context in which the Tax collection shows signs of weakening and presidential elections will be held.
As revealed by the Expenditure Adjustment Monitor elaborated by the consultancy firm Analytica, in the first seven days of February primary spending fell by 41.4% compared to the last week of January.
Charles Arterburn is a seasoned business journalist for News Rebeat, where he provides comprehensive coverage of the latest trends and developments in the world of finance and economics.