The drought has once again hit the public finances and in February there was a primary deficit of $228,000 million. This is a 200% increase from last year. for the collapse of the collection of export duties. Thus, the public sector was left on the verge of missing the first-quarter fiscal target agreed with the IMF.
In January, the Treasury had recorded a deficit of 204,000 million dollars, the worst start to the year in the last decade due to the decline in revenues from export withholdings and the increase in energy subsidies. As of the February result, the accumulated primary deficit amounted to $432,000 million, very close to the $441 billion ceiling expected through March.
The Government has come to negotiate with the Fund a reduction in the target of reserves, maintaining the commitment to reduce the fiscal deficit from 2.3% in 2022 to 1.9% in 2023, a requirement that Kirchnerism now asks to review. In this framework, in February the payment of interest on the debt amounted to 257,000 million dollars, 324% more than in 2022 and which resulted in a financial deficit of 485,000 million dollars.
On the revenue side, total revenue totaled $1.5 trillion, an 85% annual increase, less than the 102.5% inflation seen in February.
“The magnitude of the impact of the drought export duties reduced by 45% and it is estimated that the the loss of these reaches $200,000 million during the first semester. Excluding foreign trade taxes, the revenue increase would amount to 105.1% year-on-year,” the economy ministry said in a statement.
Tax revenues linked to economic activity grew by 107.2% per annum for VAT net of refunds and by 99.3% for income taxes. Meanwhile, social security contributions they grew by 106.9%.
The decline in funding was offset by primary spending, which reached $1.7 trillion. That’s a 95% increase a year, below inflation. Except for social programs and universal benefits, the rest of social benefits have had a real decline. Retirements grew by 82% and child benefits decreased by a nominal 7.4%.
Economic subsidies, meanwhile, have slowed sharply, so the energy item has only increased by 70.5%. This provides, as reported by Economía, the payment for the advance purchase of LNG for the winter period “in order to generate future savings”. And transport subsidies grew by 63.3%, also below inflation.
“Although the evolution of primary expenses reflects the prudence of the tax administration in the first two months of 2023, the drop in the collection of export duties measured in dollars to values close to half of what was collected in 2021 and 2022 for the same period and the expected decrease in the volume of agricultural production explain the severity of drought impact on public finances”said Economy.
Source: Clarin
