After having announced a lower than expected level of inflation for June, The government is preparing to give new favorable signals this week on the progress of the economyin this case refers to the fiscal anchor that the president Javier Milei promises to maintain at all costs.
The Minister of Economy, Luis Caputo, He already anticipated in recent days that last month There was a fiscal surplus again despite the fact that there were a couple of very important elements that should have caused another result. In fact, the head of the Treasury had to contradict Milei himself, who at the end of May anticipated the first red result of the State accounts.
Last month The collection fell in real terms by just under 14%There was a collapse in the collection of Value Added Tax (VAT) and Income Tax. Between the two taxes, they registered a 19% drop compared to last year’s result.
But on the other hand, In June, bonuses are paid to public sector employees and retirees, which is why the State’s accounts deteriorate seasonally every year.
Caputo is committed along with the head of the Central Bank, Santiago Bausili, andn convince the market of its strategy to stabilise the economy, Although many of the monetary policy announcements made so far do not end up providing security.The blue dollar exceeded $1,500 last week.
Yes ok The government has managed to raise doubts about its interest rate reduction policy and cleaning up the Central Bank’s balance sheet, It is not so in the fiscal field.l. There, the markets are convinced of the Executive Branch’s commitment as a whole to spending cuts and a balanced budget.
Economists speculate that the favorable result that Caputo will show this coming Tuesday in the accounts of the National Public Sector on a cash basis, which is the way in which the IMF controls the accounts of the countries, will be due to the rdelay in payments of subsidies to electricity generators.
After having agreed to outstanding debts from 2023 and from January and February with a bond until 2038, the government committed to paying the bills starting in March, but, as the Association of Electric Energy Generators of the Argentine Republic (AGEERA) had been denouncing, a new debt had been generated.
Official data that would give oxygen to the Government
According to the Congressional Budget Office (CBO) In its report on the execution of the base budget, the payment of bonuses to more than seven million retirees and pensioners in June had enough impact to temporarily break the series of months with fiscal surpluses.
Last month the National Public Administration (APN) closed with a primary deficit of $1.44 billion and a financial one of $1.82 trillion. Spending on retirement and pensions went from $2.59 trillion in May to $4.12 trillion in Junea increase of $1.53 billion which alone was higher than the entire primary deficit for the month. If we add to that the fact that Personnel expenses -also due to the effect of the payment of the half-yearly bonus- increased by $420 billion.
Of course The spending is recorded in June, but the way the IMF measures it is when it is paid. If the government paid for the $1.9 trillion seasonal surge in spending in full, it should have recorded equivalent savings elsewhere.
According cAccording to the OPC methodology, the cumulative January-June period showed a primary surplus of $4.97 billion and a financial surplus of $0.34 billion.the product of total income in the period of $37.95 billion, total expenses of $37.61 billion and public debt interest of $4.63 billion, resulting in primary expenses of $32.98 billion.
Although market operators They acknowledge Caputo’s efforts to implement a significant fiscal adjustment, it would give the impression that the government does not want the slightest doubt to be cast on the fiscal anchor.which is also questioned because it is considered unsustainable over time. Even the IMF has suggested to Javier Milei that he has to “improve the quality and durability” of the same.
Dollar: what the Government expects
In recent weeks the economic team believes it is being subjected to pressure, but the answer is that having a zero fiscal deficit, and the taps through which money was created closed (the remunerated liabilities of the BCRA) with inflation on the decline, lMonetary logic indicates that the dollar should fall, so a devaluation would not be necessary.
But the truth is that for mutual fund analysts,The government’s problem is not a supposed surplus of pesos, but rather a lack of dollars as a result of regularizing the payments of imports added an additional demand of about US$4 billion per month.
Even following the logic of closing the emission taps, the government announced that from now on it will also absorb the emission of pesos that it has to do to buy dollars in the official market.
Source: Ambito
