The closing of the week was finalized with a piece of information that the Government ponders: during February a financial surplus was recorded $338,112 million. It was the second consecutive month of good performance for public accounts. However, fine yarn raises a warning sign: on a monthly basis, The primary surplus fell in real terms by 46% and the financial surplus by 42%..
On Friday afternoon the Minister of Economy, Luis Caputoanticipated the official publication of the fiscal result, via X (ex Twitter): “the February fiscal result again showed a financial surplus @JMilei.”
The acceleration of the issue is part of the need to highlight the economic direction of the Government, after the setback it suffered in the Senate of the Nation when DNU 70/2023 was rejected. Even in the subsequent dissemination of data, the economic portfolio took the trouble to distinguish that The fiscal effort was made at the expense of the fiscal chapter of the Bases Law.
Thus, Caputo maintained that the primary result for February was $1.23 billion and the financier of $338,112 million. In this way, the second month of the year once again marks a good cash base result, and generates an accumulated primary balance of $3,243 billion, equivalent to 0.5% of GDPwhile the accumulated financial is $856,520 million.
The data per se are celebrated by the Government as a management success, but the Excel breakdown accelerates the question about the sustainability of the method: once again, the cut and liquefaction were the protagonists of the fiscal result. This is what Economy highlights: While the real year-on-year variation in income was 6.3%, spending fell 36.4% in the same period.
The economic team that answers to former minister Sergio Massa has its eye on these details. In an analysis of the results of the public accounts, they addressed the following conclusions:
First of all, they warned about the 20% real drop in income, between one month and another. They put it this way: “Looking at the variation of February versus January, they had a phenomenal contraction of resources, even though they collected the COUNTRY tax on the placement of the BOPREAL” the bond that works to manage access to foreign currency for importers and as a resource for monetary sterilization.
For the IARAF, the Argentine Institute of Fiscal Analysis, this drop in income had to be compensated by the decrease in spending, “unlike the month of January, where income remained constant”.
The items that explain the drop in spending
For this reason, they point out from massism, in monthly terms the primary expenditure “fell 8% real“, explained by retirements, wages, capital expenditure and university transfers“in that order of importance.”
However, energy subsidies lifted the execution of February compared to January, marking an increase in 121% in real terms, after having transferred $271 million. In this way, the study concludes that the intermonthly measurement marks a 46% drop in the primary surplus – in real terms – and another in the financial surplus, 42%.
The expenditure of resources on the energy sector will be key in this two-month period: the tariff schedule for the natural gas service through the network should have been made official on Friday, after the public hearing on January 8. Caputo, in the attempt to sustain the slowdown in prices, Postponed publication againas well as the authorization of the 36.6% on train and bus tickets since April.
Regarding the bimonthly comparison against the same period in 2023, the Ministry of Economy points out the same trend: a contraction of the 38% of the primary expenditure in real terms, compared to a variation in the income of -2.5%.
Looking at the incidence of the items that explained the drop in spending in the same period, the analysis that responds to the leader of the Renewal Front indicates that “13 points correspond to retirements, 6 to subsidies, 5 due to capital expenditure of the SPN itself, 5 points for transfers to provinces (current and capital), 4 for salaries and other operating expenses and the last 4 for social benefits.”
For the economist and author of Libertarian Fallacies, Guido Agostinelli, the surplus will be difficult to maintain “as long as the collection continues to fall precipitously“, today supported by “taxes linked to foreign trade and the COUNTRY tax.” The latter should be temporary, at the request of the International Monetary Fund itself.
On the other hand, Agostinelli highlights, the social context will become “even more overwhelming in April” due to rate increases and inflation in values that are still very high, so “stepping on state salaries and pensions seems unfeasible.”
Martín Kalos, director of the consulting firm EPyCA, warns that the contraction of revenues collected “shows the impact of the decline in activity“, while the surplus in public accounts “It is sustained by stepping on expenses that cannot be stepped on forever.”.
It will be because of the unsustainable nature of the proposal, that the portfolio led by Caputo clarified that it will be necessary to add “to the ordering of the accounts”the impact on cash-based results of tariff readjustments in energy, transportation and gradual updating of the fuel tax”. Meanwhile, for economists, the V-shaped recovery is further away than publicly anticipated by the Government.
Source: Ambito
