Argentina’s treasury ran another primary surplus in June, reaching ARS 488.6 billion, significantly above the deficit of ARS 611.7 billion posted one year earlier. The nominal fiscal balance stood at ARS 238.2 billion, also printing positive after a deficit of ARS 708.6 billion in the same month one year ago. As a result, the primary balance during the first six months of the year reached 1.1% of GDP, while the nominal balance stood at +0.4% of GDP. Based on these figures, we estimate a consolidated nominal deficit of around 1.4% of GDP year to date (including net interest payments from the central bank), narrowing from 5.1% in the same period of 2023.
Real tax revenues fell in 2Q24. Tax collection fell by 4.2% yoy in real terms in the period, after dropping by 4.8% in 1Q24. Total real revenues decreased by 5.9% yoy in the period (-5.0% in 1Q24). Income tax and other revenue taxes have played a key role in the recovery of revenues in recent months.
Real primary expenditures fell again in 2Q24. Primary expenditures declined by 30.2% yoy in real terms in the period, compared with a 34.7% yoy drop in 1Q24. Pension payments were down 20.1% yoy (-35.6% in 1Q24), while payrolls decreased by 17.5% yoy (+19.4% in 1Q24), both affected by the sharp acceleration of year-over-year inflation. Capital expenditures were down sharply by 76.8% yoy (-86.9% in 1Q24) due to the freeze on public works. Energy subsidies fell by 44.4% yoy, compared with a drop of 48.7% in 1Q24. On the other hand, expenses in social programs fell by 25.3% yoy, while transfers to provinces plunged by 73.3% yoy.
Our take: We recently revised our forecast for the fiscal primary balance to +1.0% of GDP in 2024, from +0.5% of GDP after the approval of the fiscal package in Congress.