Due to higher funding and the slowdown in spending, the deficit narrowed by 23% in July

Due to strong growth in tax collection and slowdown in spending, the primary deficit in July was $ 75.947 million. a decrease of 23% compared to the same month last year.

Meanwhile, if you add interest payments on the debt, the financial result is negative 131,663 million dollars.

Thus, in the first seven months of the year a primary imbalance of 876,628.7 million dollars accumulates (-1.1% of GDP).a lower than expected result for this period of the year.

The Ministry of Economy attributed the reduction of the red in public accounts to the changes that the portfolio has begun to make, after the approval of the budget by decree last June.

The head of the Treasury, Sergio Massa, promised last week to reduce spending during a conference at the Council of the Americas and this Monday announced a budget cut in $ 128.0 billion.

“In line with the provisions of the Minister of Economy in the sense of ordering public accounts in compliance with the current budget, recently amended by DNU 331/2022, the month of July shows a series of corrections which allow us to resume a fiscal path compatible with an annual deficit of the National Public Sector of -2.5% of GDP “, reports the portfolio.

On the revenue side, $ 1,384,925.6 million was raised (82.8% year on year), thanks to tax revenue generated by income tax ($ 81,673.3 million; 132.6%)Personal Wealth ($ 9,915.8 million; 322.8%), Payables and Receivables ($ 56,167.7 million; 85.2%) and Social Security Resources ($ 189,353.4 million; 74%).

Taxes associated with foreign trade showed an increase of $ 50,621.5 million. Import duties increased by 81.1%, due to business growth, while export duties increased by 41.2%, due to limited sales of wheat.

In turn, property income increased by $ 88,843.4 million (286%), but the increase in primary issues of the Treasury (74,002 million dollars) was not taken into account, in order to respect the annual limit for calculating this income set in the agreement with the IMF, equal to 0, 3% of GDP.

In terms of spending, $ 1,386,870.8 million was spent, an increase of 62% year-on-year. As inflation over the same period was 71%, there was a real decline. “In the month of July total real spending fell by -3.7% and primary spending by -5.3% after 9 months of real growth“said Nadin Argarañaz, head of the Argentine Institute of Tax Analysis (IARAF).

More capital expenditures

Capital expenditure was the item that grew the most in percentage terms, with an increase of 35,362.7 million dollars (68.3%). It was followed by economic subsidies (64.4%), although transfers to energy remained high (77.7%) due to energy imports from CAMMESA and basically from IEASA.

Social Security benefits increased by $ 267,349 million (62.8%), driven by retirement benefits and pensions (71.9%). Within this item, the other social programs (37%) and the PAMI benefits (47.2%) AUH (32.2%) are those that have grown the least.

On the other hand, current transfers to the provinces increased by $ 5,361 million (17%) and transfers to universities increased by $ 19,626 (56.6%).

“Within the real drops in spending, the decreases in allocations for social protection, INSSJP benefits and transport subsidies stand out respectively of -22.7%, -13.9% and -35.5%. It should be noted that energy subsidies continued to grow in real terms by 3.9% year on year, “noted the IAAF.

According to the institute, the accumulated deficit in July 2022 should have been 1.23% of GDP, but in the end it was 1.13% of GDP. “This is the effective primary deficit in July was half of usual“Argañaraz stressed.

However, the red in the first seven months it is still above 2021 (1.13% versus 0.66%), so the challenge of lowering it to reach the 2.5% per annum expected with the Fund is very great.

AQ