In May the public accounts would have deepened the deterioration that they have been showing since the beginning of the year. Last month the Treasury had to resort to $440,000 million in assistance from the Central Bank, as temporary advances, and in turn obtained a net funding of $457,000 million in the domestic market through debt tenders in pesos. In total, it required assistance for almost $897 billion.
Although expenses are being reduced, the problem lies more than anything in the drop in resources due to the effect of the drought. The increase in the financing needs of the Treasury last month would be marking the trend towards a higher deficit. Next Thursday the 22nd, the Ministry of Finance plans to report the data of the National Public Sector.
Government is in full negotiation with the International Monetary Fund (IMF) to rethink the program with Argentina, that already at this time of the year everything indicates that it will not be possible to fulfill, among other issues, due to the drought that affected tax revenues through export withholdings, and on the other hand, because in 2023 the Government cannot dispose of the accounting profits generated by primary debt placements. “Property income” contributed 0.3 points of GDP last year. This year they cannot be used.
This combination contributed to the fact that the current administration falls far short of the expected objectives. It had promised to end 2023 with a primary deficit of 1.9% of GDP and analysts estimate that it will end at a minimum of 2.5% of GDP. Some suppose that it can reach 3%.
In the first four months the accumulated deficit reached 0.62% of GDP, something that is above the goals. Along with this, the goals of monetary issue to assist the Treasury were also limited. The BCRA has already assisted since January 1 with $670,000 million.
According to estimates from the Center for Argentine Political Economy (CEPA) headed by economist Hernán Letcher, between January and April the bankruptcy of the national public sector on a cash basis, which is the IMF’s way of measuring, climbed to $1,020 trillion, while the goal for the semester is $1,185 trillionfrom which it follows that in May the goal would have already been breached.
Another scenario according to the accrued expense
The scenario looks a little different if the budget execution data is taken, based on the accrued, as estimated by the Congressional Budget Office (OPC) that measures only the National Administration, without including decentralized agencies.
The report notes that With adjustments of 30% real year-on-year, the Economy completed 11 consecutive months of decline in the primary deficit in May, with four main axes for its execution: the liquefaction of the hand of inflation and cuts in spending for family allowances and social programs in general, energy subsidies and transfers to the provinces.
For the technical office of Congress, the primary fiscal deficit for May was only $113.188 millionwith a drop of 46% compared to the same period last year.
Source: Ambito
