Government achieved fiscal surplus again in May, due to the reduction of subsidies and the increase in collection

Government achieved fiscal surplus again in May, due to the reduction of subsidies and the increase in collection

The month of May represented a new positive record for the national Government in terms of primary surplus. According to a study by the Congressional Budget Officewhich offers reports to determine the impact of legislative reforms, the National Administration reached $2.5 billion in May in assets in their public accounts.

The same analysis indicates that this month, $1.3 trillion for debt interest paymentsfigures that are replicated if the study is extended from the beginning of 2024: of the $6.4 billion of primary surplus between January and May, $2.4 billion was used to pay credit interest.

This month’s primary surplus is explained by the increase in collection of Income Tax, with a real increase of 80.4% year-on-year. According to Congressional Budget Officethe increase in the tax gain produced by the acceleration of prices in 2023 and the exchange rate jump in December had a direct impact on the balance to be entered in that month.

In that framework, Total national tax collection in May grew 10.7% year-on-year in real terms, against a drop of 10.1% in the first quarter. He VAT accumulates a contraction of 6.3%, due to the performance of the DGI VAT, which fell 14.1% due to the drop in the level of activity. The resources of the Social Security They contracted 20.1% year-on-year due to the reduction in employment and the fall in real wages.

On the other hand, the total expenses of the National Administration they accumulated a 27.6% drop in real terms In the first five months of 2024: primary expenses registered a decrease of 31.3%, while debt interest showed an increase of 1.5% real year-on-year. In energy subsidiesthe report indicated that transfers to Cammesa, the company that manages the electricity sector, totaled $674,072 million in May (-64% real year-on-year).

Luis Caputo at IAEF 2.jpg

Luis Caputo, Minister of Economy.


Budget 2024: if inflation was reflected, only 15% was executed until May

The level of execution of the national budget appears to be at levels similar to the usual average or even above average. For example, the Ministry of Finance reports that As of June 5, 53% of the assigned credits had been executed.

According to data from the Congressional Budget Office (OPC), in May of last year the government had spent 36% of the allocated resourcesa level that could be said to fall within the parameters.

Of course To really measure whether there is under-execution or over-execution, consistent budgets are required. something very complicated to achieve in political contexts that are adverse to the ruling party in power, or because inflation is usually underestimated when preparing the expenditure and income guideline when the data is presented to Congress every September 15.

This year, For example, the ruling party decided to extend the 2023 budget, but without making an estimate of inflation for the entire period. Then 2024 started with a credit of $40.2 billion, the same as the one that had ended in 2023. Then it added more credits via the Decree of Necessity and Urgency, with which the budget now is $55.8 billion.

Some analysts warn that if the government had updated the credits of the 2023 budget with the inflation most similar to what will occur during the year, andThe level of budget execution would remain well below 53%.

Deputies recover political initiative and challenge the power of Javier Milei’s veto

Casa Rosada had two obsessions when it began its management: inflation and fiscal deficit. As the price increase has not yet reached rates that conform to social expectations, the President relies on his other bastion. Three others appear in the retirement project that may further irritate the President, in advance of the arrival of the Bases law to the Senate floor: Financing Law for National Universities, restitution of the National Teaching Incentive Fund (FONID) and Transportation Compensation Fund.

“I will not deliver the zero deficit”the president titled his publication on the social network Chamber of Deputieswhich he seemed to have forgotten after being backed up with the Law Bases. However, he no longer calls them caste: “What the old politics proposed has been failing for a century and that is what we have come to change.

Milei continues to establish himself as the alleged defender of public accounts. However, since the opposition blocks took two behaviors that can erode that strategy: relying on expense studies to do not neglect the potential fiscal deficit and advance projects that increase budget items on urgent issues that impact the public agenda. Thus the responsibility remains on the side of the Executive who, eventually, will have to face the political cost of vetoing an improvement to the current pension reform that is governed by decree of the President himself.

Germán Martínez Nicolás Massot Deputies

Germán Martínez, president of the Unión por la Patria bloc, with Nicolás Massot, from We Make the Federal Coalition.

Germán Martínez, president of the Unión por la Patria bloc, with Nicolás Massot, from We Make the Federal Coalition.

Photo: Ignacio Petunchi.

Even so, If they have two-thirds of the votes, Deputies would be able to ratify the vetoed projects, which would put the President in check and set a precedent for new discussions. In the Senate, the ruling party has even fewer chances.

“Teachers have unions and universities have rectors, but retirees do not have such organized representation and they are the ones who suffered the shock of the Government’s adjustment. “So we came to deal with this matter of urgency,” he said before obtaining approval. the radical Lisandro Nieri, one of the drafters of the text that was agreed upon with Peronismwho highlighted that the new Integrated Retirement and Pension System implies a cost of 0.43% of GDP.

It is enough to review Tuesday’s session to detect that The issue of the fiscal deficit is fully incorporated in the speech of each member of the UCR blocwhich requested to postpone the debate for the Financing Law of National Universities and the FONID. The latter would have a cost of 0.21%. “Everything adds up, it’s true, but the President said that the adjustment went too far,” Nieri added. Once the financial recomposition amounts are agreed between the main opposition blocs, both laws will be approved in Deputies.

Source: Ambito

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