It is a fact that the lack of rain towards the end of 2022 and the beginning of this year had a severe impact on public accounts. Farm entities estimate that US$25 billion in exports were lost this year, so the taxes generated by those sales abroad have been plummeting. Despite the efforts that the Ministry of Economy has been making up to now to reduce the level of spending, the reality is that the national public sector deficit has been growing due to a drop in resources. But not everything is explained by the drop in retentions.
According to estimates of the Argentine Institute of Fiscal Analysis (IARAF) 44% of the fiscal deficit of 2023 is due to the reduction of resources that do not come from the collection of taxesamong them the Property Income and one of its most important items, the book profit for placing debt bonds below par.
“The item with the greatest participation is net property income. These revenues have the particularity that in 2022 they included income from placements of primary issues until the month of April, for a value equivalent to 0.3% of GDP, ”says the report.
The work states that as of April 2022, these incomes were excluded from execution as they had reached the limit set in the agreement with the IMF of 0.3% of GDP for 2022 and completely eliminated for the current year. According to the institute directed by the economist Nadín Argañaraz, “the fact of not counting these incomes anymore, leads to a drop in net income of 0.25 percentage points of GDP.” “Almost that in a four-month period the expected drop in rents for the entire year was exhausted,” the report states.
The “property income” item helped former Economy Minister Martín Guzmán achieve a 2.4% deficit of GDP last year. In March 2022, the government recorded income for this concept for a value of $157.8 billion, and thus said it had exceeded the fiscal goal for the first quarter.
In terms of bond placements, the increase was 1,742% between March 2021 and the same month last year. It was a jump from $6.7 billion to $123.6 billion. Guzmán had appealed to that resource to mask the numbers of the public sector before closing the agreement with the International Monetary Fund (IMF). After that, he was able to apply only 0.3% of GDP in the year. Since January, no more can be counted.
That’s why, The first calculation that had to be made to define the magnitude of the adjustment that Guzmán committed to by 2023 is not from 2.4% to 1.9% of GDP, with an adjustment of 0.5 points, but of 0.8 percentage points. As long as the goal is not changed, that is the magnitude of the cut that must be made. But, If the forecasts of the analysts that the Washington-based body authorizes a red of 2.4% are given, the government will also have to make a slight adjustment of 0.3 points of the GDP.
Source: Ambito
