Between January and June, public spending plummeted by 32% compared to 2023. Social benefits, investment and subsidies were the hardest hit expenditures.
The fiscal adjustment implemented by the Government of Javier Milei during the first semester was equivalent to 5.6 points of the Gross Domestic Product (GDP) if annualized. The result was achieved thanks to a real collapse of 32% in public spendingcompared to the first six months of 2023.
This collapse more than compensated for the 5% drop in revenuesaccording to a report from the Argentine Institute of Fiscal Analysis (IARAF). According to the work, this improvement in the fiscal balance would allow a primary deficit of -2.7% of GDP in 2023 to a surplus of 2.9% in 2024.
IARAF also noted that the Spending on debt interest payments contracted by 5% in real terms between January and June, versus the same period last year. Therefore, in annualized terms would represent 1.7% of GDP, which would allow the financial fiscal surplus to be 1.2% of the product (against a deficit of 4.4% in 2023).
“It is important to note that this annualized data does not represent a fiscal projection for 2024, but rather an equivalent annualization of the fiscal behavior of the first 6 months of the year,” clarified the institute headed by Nadin Argañaraz.
In June there was a fiscal surplus for the sixth consecutive month
This week, the Ministry of Economy reported that in June there was a primary fiscal surplus of $488.569 billion, while the financial surplus (discounting debt payments) reached $238.189 billion.
President Javier Milei had anticipated at the end of May that the first primary deficit of 2024 could be observed in June due to the payments of the Christmas bonus. In this context, some analysts considered that, in order to sustain the financial surplus, the Government delayed payments, specifically to electricity generators.
The most significant declines in spending, due to their weight in the overall structure, were seen in energy subsidies (-81.2% real year-on-year), real direct investment (-65.5%) and social programs (-47.2%).
Source: Ambito
