Due to weak collection of levies, the budget deficit widened again in February and continued the trend of January

The public accounts deficit could show through in their February figures another strong jump and it would go on like this january trend, according to private estimates in official databases. The Ministry of Economy has a primary red cap stipulated by the agreement with the Monetary Fund for a total of $441 trillion for the first quarter of the year.

Figures given in a report by the Congressional Budget Office (OPC) reflected a deterioration of the fiscal front in the second month of the year, something that the offices of the Palacio de Hacienda have acknowledged in recent days. According to OPC projections, in February the primary deficit -not counting debt interest payments, which is the metric taken into consideration with the IMF- increased 177% compared to the same month of the previous year.

The figure is not exactly comparable to the reports published monthly by the Ministry of Finance, due to accounting criteria. The Treasury takes into account the public accounts with the methodology “box bottom”while the OPC -and other private investigations- do so with the accrualthat is to say, it may include payment commitments which have not yet been effectively made.

In a report made public on Wednesday, this study center indicates that in February the primary deficit rose to $429 trillionwhich would imply an increase in 177.6% measured from year to year. With the methodology used by the OPC, January had been a positive month for the public accounts – which subsequently did not correspond to the basic cash report of the Ministry of the Economy -, therefore, by combining the period January Februarythe result of the primary deficit is $107,085 million.

The increase in the deficit in February was explained, according to the OPC, by the fact that “total resources decreased by 7.2% in real terms and total expenditure decreased by 4.6%. Tax revenues fell by 14.3% on average, a decline that reached 56.4% in exit duties,” they mentioned.

Spending cuts were not enough to offset the impact of the drought on the fiscal front. Still according to the OPC, in February there was a drop of 38% transfers to provincesin the capital expenditure (37%) and in economic subsidies (22 percent). In general, income fell 15.3% and expenses increased by 8.4 percent.

The annual objective allows, according to the program with the IMF, a red budget ceiling equivalent to 1.9% of GDP. But he also has quarterly authorities to respect. By the end of March, in two weeks, the public sector should not have exceeded the $441 trillionwhich represent a 0.3% of the product.

The first month of the year began with a marked jump in the deficit, over 1000% over one year, which left the public accounts in the red of $203 trillioni.e. a little less than one 0.14% of GDP. Official data from the Ministry of Finance corresponding to February will be published next Monday.

It was only the first month of the year that the Palacio de Hacienda used the 45% of this “quota” primary deficit authorized by the agreement for the period January-March. As senior officials in the economics team have explained, after January’s deficit increase, February’s figures will also show a fiscal performance that It would be similar to the first month of the year – the official figures will be announced next week – so “in March, we will have to work hard and even” not to exceed the objective, they assured.

The advisability of readjusting the fiscal target alongside the reserves target has been discussed by various private reports in recent days. One of them was from the consulting firm PxQ, from Emmanuel Alvarez Agiswho felt that the recalibration of the agreement is rather “a game in the middle of the worst drought of the century”.

“Not changing the fiscal target implies that despite the negative impact of the drought on the collection of export duties, the target for 2023 remains a primary deficit of 1.9% of GDP,” he said. mention. “The decline in collection due to reservoirs linked to the drought will be around 0.3% of GDP, or 0.4%”.

For its part, the Argentine Institute of Fiscal Analysis (Iaraf), estimated that “if we add the fall in tax revenues due to the drought, the necessary reduction in expenditure is much greater. In this scenario, total revenue would fall by 1.9 percentage points of GDP and primary expenditure would fall by 2.4 percentage points of GDP. In real terms, revenues would fall by 7% and expenses would fall by 8.5%,” he added.

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