According to calculations by the consultancy firm ACM based on January and February fiscal data from the Ministry of Economy, Most of the fiscal adjustment made is basically due to the failure to update pensions, benefits and salaries.. On the other hand, the share of the adjustment that decreases due to the chainsaw and that Luis Caputo ‘tramples’ the area.
In the first two months of the year, primary spending had a real negative variation – without taking into account the effect of inflation – equal to 36.5% compared to the same two months last year. This means a contraction. The Government has resorted to various tools to achieve this result but there are basically two: liquefaction and the chainsaw.
According to the consultancy firm pxq “Up to the first two months, the government has achieved the first fiscal target with the IMF of more than 200%.”
The 36.5% drop in primary spending in real terms in the first two months is divided into the following items and quantities: 15.7 percentage points for lower social benefits paid because these are expenses that depend on updates not yet produced, 7, 7 pp less for capital expenditure (essentially amortized expenditure not yet paid but for which it appears required), 5.4 pp reduction in economic subsidies and the rest of the adjustment was concentrated in smaller expenditure such as transfers to provinces (2 pp), state operating expenses (3.5 pp) and transfers to universities (0.8 pp). The sum of these data per item is equivalent to 36.5%.
All this therefore concludes that the explanation of the adjustment by the liquefaction (social benefits, subsidies and public sector wages) represents 60% of the total in the first two months. While the chainsaw factorThe cut of items was only 24.6%.
“There are very small items, such as transfers to universities which absorbed 3.6% of the adjustment, they are not representative,” explained Francisco Ritorto, of the ACM. “Most of it goes to benefits and pensions.”
The decrease in social benefits occurs because the mobility formula operates with a delay. And the decline in capital spending is due to government cuts. In February, capital expenditures had a negative change of 87%.
In February, in particular, the decline in spending in the Provinces emerged. While current transfers saw an average decline of -81% in the first two months compared to the monthly average of 2023, capital expenditure allocated to the provinces fell by 96%. However, according to ACM calculations, the incidence of the provinces in the decrease in spending is equal to 5% of the adjustment.
According to pxq “inflation continued to pulverize pensioners’ incomes and recorded a new record. In February, spending on Social Security benefits fell 34.5% in real terms year over year, the deepest decline in at least 30 years”.
The fiscal target established with the International Monetary Fund (IMF) in the latest review calls for an accumulated primary fiscal surplus of $962.4 billion for the first quarter of the year. The February result indicates a virtual achievement of the target and gives rise to a margin of error of $2,280,870 million in the primary deficit for the month of March.
The exceeding of the fiscal result of the first two months would be added to that of international reserves due to the decline in imports due to the recession. In February, purchases abroad decreased by almost 20% and for many this would explain a trade surplus of 14,000 million dollars.
Analyzing the most affected items, we find that 60% of the reduction in spending is due to expenses that depend on updates, such as social security and salaries. “In this sense the sustainability of the primary surplus is weak compared to its recovery in the coming months,” consultancy firm px q said.
Source: Clarin
