2024-01-23 20:36:30
After knowing that The fiscal deficit in 2023 was 6.1%, the national government insisted that it will make the necessary adjustment to achieve budget balance this year and added another round in the fight with the governors for the sanction of the Omnibus Law by prohibiting provincial banks from lending money to their States.
In the last hours The Ministry of Economy published the final result for December and the annual closingwhich includes actions of both the outgoing government and the impact of some measures taken by the current Executive Branch.
The Minister of Economy, Luis Caputo, pointed out that the 2023 deficit “was higher than expected”but reiterated that in 2024 it will be eliminated.
According to official data, last year closed with a primary deficit (before payment of debt interest) of 2.7% of GDP – equivalent to $5.4 trillion –, 0.8 points above 1 .9% that the government of Alberto Fernández had committed to achieving when signing the renegotiation with the International Monetary Fund (IMF) that led to a disbursement of US$ 7.5 billion in September.
Meanwhile, the financial deficit (after interest payments) was $6.1 billion, equivalent to 3.4% of GDP.
In this way, the total imbalance in public accounts amounted to $11.5 trillion, 6.1% of GDP.
He Economist Salvador Vitelli published a graph on the “X” network in which he showed the fiscal evolution in the last six decades: “Out of 63 years, 57 were deficient at an average of 4% per year,” the post said.
Caputo highlighted the publication and noted: ““This government is determined to end this scourge that has led us to the current situation.”
Good graph by Salvador Vitelli, summarizing what has been the root of our economic problems.
The 2023 financial fiscal deficit closed at -6.1%, even higher than expected.
This government is determined to end this scourge that has led us to the current situation.… https://t.co/kxFnpYypp9— totocaputo (@LuisCaputoAR) January 23, 2024
“The commitment to reach zero deficit will not change, whether the law is approved or not.”Caputo said.
He also took the opportunity to send a message to Congress and especially to the governors: “The commitment to reach zero deficit will not change, whether the law is approved or not.”
To reinforce his position and further corner the provinces, Caputo and the president of the Central Bank, Santiago Bausili, They decided not to extend the authorization for provincial banks to finance local states. “It is a mechanism that they used many times to cover their urgent financial needs,” said spokesperson Manuel Adorni, under instruction from the monetary authority.
Thus, If the law gets bogged down, the Government has already announced that there will be a greater adjustment in transfers to the provincess, which also, as of today, no longer have the possibility of requesting loans from their own banking institutions. This situation would leave them much more on the verge of having to issue quasi-currencies.
The level of fiscal deficit with which Javier Milei took office shows that The magnitude of Argentine public spending is not compensated only by “adjustment to the political caste.”
Milei’s measures to compensate for the deficit
Consequently, the government will accelerate in the coming weeks with a battery of measures to close the gap: removal of subsidies, replacement of the tax on employees and a new retirement formula.
“The accounts are torn to pieces and “We are going to achieve fiscal balance no matter what,” the presidential spokesperson, Manuel Adorni, insisted today.
On the other hand, it is worth remembering that The Government committed to the IMF to achieve a primary surplus of 2% of GDP, which means a global adjustment of 8% of GDP plus the 10 points that must be adjusted from the Central Bank.
The numbers for the month of December are eloquent and when each item is disaggregated, the consequences of the “small money plan” with which the former Minister of Economy, Sergio Massa, wanted to remain in power, are exposed.
For example, during December expenditures on social benefits (including pensions and plans) rose 140% to $3.1 trillion, or almost 60% below inflation.
However, the Economic subsidies multiplied by six, reaching $702,000 million. Compensations for transportation and energy rates and VAT refund plans on purchases that were paid from the National Treasury must be computed here.
This is one of the points of discussion with the governors, who intend that instead of increasing withholdings, the national Executive moves faster in removing subsidies for the AMBA.
Also contributing to the imbalance were current transfers to provinces that rose 355.2% to $295,000 millionafter former minister Sergio Massa, would enable additional funds to pay December salaries.
A black hole through which the fiscal deficit was fed was the item “other current expenses”, which went from $43,000 million in December 2022 to $248,000 at the end of 2923.
However, it is also worth mentioning that Caputo would have manipulated some figures from the final balance of 2023 to provide grist for his mill. The payment of debt interest in December 2023 for $3.3 trillion would include the advance payment of $2.9 million of debt bonds, according to the consulting firm Aurum Valores.
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