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The fiscal deficit rose to 4.4% and worsened for the fourth consecutive month

The fiscal deficit rose to 4.4% and worsened for the fourth consecutive month
The fiscal deficit rose to 4.4% and worsened for the fourth consecutive month

He fiscal deficit worsened for the fourth consecutive month and reached 4.4% in the 12 months ending in May, according to the Ministry of Economy and Finance (MEF) when reporting the result of the Global Public Sector (SPG), purified of the effect of Social Security Trust (FSS).

In turn, the deficit of Central Government – Social Security Bank (GC-BPS) was 3.4% of the GDP in the 12 months ended April, while it increased to 3.6% discounting income to the FSS. This scenario raises alarm bells for the government days before internal elections, taking into account that the fiscal result usually deteriorates in election years.

The GC-BPS income were at 27.2% of GDP, a slight increase compared to March, despite the drop in the Income category Central government was offset by higher revenue collection BPS.

Meanwhile, the primary expenditures They stood at 28.3% of GDP. He MEF recalled that the expenses closed in the last 12 moving months include the effect of the advance to March of the payments of liabilities, remunerations and transfers (BPS) corresponding to April 2023. If the effect is adjusted, the expenses increased by 0.1% monthly, mainly by seniors non-personal expenses.

Regarding the payment of interest of the GC-BPS, it remained stable at 2.4% of GDP, while the Public enterprises had a deficit result of 0.3% of GDP, falling 0.1%, due to the lower result of Ancap.

Likewise, the result of the Non-Monetary Public Sector (SPNM) was negative and stood at 3.4% of GDP, decreasing 0.1% compared to the twelve months ending in April.

Finally, the deficit of Central Bank of Uruguay (BCU) stood at 0.8%, worsening 0.1%.

The advice of the Committee of Experts to improve fiscal institutions

When referring to the fiscal institutionality, he Expert Committee which depends on the MEF proposed a few weeks ago a series of tips such as “deepening the level of debt prudent to achieve in stabilizing debt in relation to output.”

Another recommendation was to put a cap on current expenditure, “prioritizing spending on investmentwhich usually has a greater fiscal multiplier and impact on future potential growth”, as well as evaluating “alternative methodologies to estimate the “potential GDP”, as well as the possibility of “identifying correction mechanisms” in the face of potential deviations from the fiscal rule”.

Source: Ambito

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