The government is currently analyzing the latest data on the national public sector accounts for February, which would have the same positive bias as those of January, when a fairly large primary and financial surplus was achieved, in a context of low seasonal budget execution.
The result would be obtained from a continuity of the very strong spending cut policies that the government faced by Javier Milei in the first month of the year although more attenuated in the second due to the effect of the increase in pension spending due to the $70,000 bonuses for minimum salaries.
Thence It emerged that Minister Luis Caputo could once again anticipate the announcement of the data which are generally done between the 20th and 21st of each month. Last month he did it on the 16th, before the weekend, to send signals to the markets.
Evensome operators speculate on the impact that a confirmation of the fiscal bias may have on the value of securities in pesos and bonds of the government. As the president repeats, “zero deficit is not negotiated,” since it is the anchor chosen to give signals to economic agents.
One of the elements that supports the theory that the result would be less bulky that January is that in February the Tax collection plummeted 11% in real terms, as a product of a reduction of almost 40% in Income Tax, which is one of the key taxes of the system.
Furthermore, according to the economists consulted, to achieve the positive result in February One of the key cuts would be subsidies to the Wholesale Electricity Market Administration Company (CAMMESA). Complaints from distribution companies regarding rate increases they are receiving from CAMMESA reveal that the Government maintained the same tone as in January. That month the real cut in State aid was 77% year-on-year. $108,000 million were paid. The cut would be at least $300,000 million.
On the other hand, if you take the data accrued from the National Public Administration (APN) as an approximation of the behavior of the Executive Branch in relation to expenses, andThe cut would be around 30%, according to the Argentine Association of Budget and Public Financial Administration (ASAP).. The entity confirmed that last month there was an estimated financial deficit of $186,635 million, which was 93% lower than that of the same period in 2023. Meanwhile, there was an accrued primary surplus of $929,124 million.
It must be taken into account that In January the Government increased the floating debt by $505,179 million. Of them, $288,190 were transfers, most with provinces, and $132,000 million in salaries. When adding the balance for 2023, the government started February with a floating debt of $1.28 trillion.
According to ASAP, last month the APN’s total income adjusted for inflation showed an increase of 4.9% compared to the same month of the previous year.
“The evolution of the Total Expenses accrued by the National Administration presented a contraction of 31.3% adjusted for inflation compared to the same month in 2023,” indicates the report.
The work indicates that “if the payment of debt interest is excluded, it is verified that primary spending contracted in year-on-year terms by 35.1%”
Primary spending shows significant decreases in Social Security Benefits (Retirements and Pensions), which represent 43% of primary spending, around 32.8%.while Current Transfers, which represent approximately 37% of primary spending, account for a drop of 37.2%.
Capital outlays were reduced by 84.1% compared to February 2023, as a result of a strong reduction in Real Direct Investment (-77%) and Capital Transfers to Provinces (-94.4%).
Regarding energy subsidies, a drop of 60.1% is observed. Transportation subsidies, which represented 2.9% of primary spending, suffered a drop of 67.9%.
In February There was a new drop in Current Transfers destined to Provinces and Municipalities of 46.6%. One of the main transfers to provinces is the National Teacher Incentive Fund (FONID). In February 2024, $244 million that had been previously accrued was reversed, causing a drop of more than 100% compared to the same period the previous year.
Source: Ambito
