As forecast by private consultants’ analysis, in February the National Public Sector (SPN) once again suffered a higher level of impairment of its accounts, what put the government on the brink of a fiscal goal breach of the first quarter agreed with the International Monetary Fund (IMF).
In the first two months of the year, the primary deficit reached $432,072 million, which leaves a margin of just $9,427 million for March to stay within the target of the first quarter of the year of $441,500 million.
“In the first two months of 2023 we practically consumed the entire primary deficit target of the agreement with the IMF for the first quarter of 2023, which was very comfortable. We have to say goodbye to the 2023 fiscal goals, we are not setting any,” said economist Gabriel Caamaño, from Consultora Ledesma.
As reported by the Ministry of Economy in the second month of the year the SPN registered a primary deficit of $228.134 million. Total revenue reached $1.57 trillion, with a real drop of 5.7% mainly affected by the performance of taxes associated with foreign trade, which includes the impact of the drought. On the other hand, spending in the month totaled $1.79 trillion with a real increase of 1.3%.
Caamaño considered that The Ministry of Economy “mortgaged” the goals of the first quarter of 2023 by anticipating the liquidation of exporters through the soybean dollar and “kicking” the payment of expenses from December to January. In fact, the first month that is seasonally in surplus or slightly in deficit, this year it registered a high level of bankruptcy, due to what is called “floating debt”.
The head of the consulting firm Ledesma estimated that for Sergio Massa can put the situation back on track, he would have to execute a real drop in spending of 15.9% throughout this month, provided that income shows the same level of behavior as in February. In the projections of the consultancy Ledesma, income for March should reach $1.994 billion, while expenses should reach $2 billion. In the first case, the drop would be 8.5%, while in the second it would be 15.9%.
The economist warned that “the economic policy decision to mortgage the first quarter of 2023 at the end of 2022 was made knowing the factors and risks”, because, as indicatedIt was already known that the coarse harvest was not going to be good” as a consequence of the drought that was already occurring at the end of last year.
It is to be assumed that in April, when the Argentine government sits down again with the IMF authorities to review the international reserve targets, fiscal targets will have to be included..
Nadín Argañaraz raised in a recent work of the Argentine Institute of Fiscal Analysis (IARAF) that “it would be consistent for the IMF to adapt the fiscal target to the drought, placing it above 1.9% of GDP.” “The new target could be 2.4% of GDP, considering that the severity of the drought anticipates a minimum loss of tax revenue for the national Treasury of 0.5 percentage points of GDP,” he said.
Source: Ambito
