Argentina’s treasury ran a primary surplus of ARS 2,010.7 billion in January, from the deficit of ARS 203.9 billion posted one year earlier. Thus, we estimate the 12-months primary deficit decreased to 1.5% of GDP in January 2024, down from 2.9% estimated for 2023. The nominal fiscal balance stood at ARS 518.4 billion, marking the first surplus since August 2012.
Tax revenues continued falling in real terms in the quarter ended in January. Tax collection fell by 7.4% yoy in real terms in the period, after dropping 11.7% in 4Q23 amid soft activity. Total revenues decreased by 5.0% yoy in the period (-7.7% yoy in 4Q23).
Primary expenditures plummeted in real terms at the beginning of the year. Primary expenditures fell by 18.4% yoy in real terms in the quarter ended in January, compared with a 3.7% yoy drop in 4Q23. Pension payments were down 26.9% yoy (-16.9% yoy in 4Q23), while payroll decreased by 4.3% yoy in real terms (+11.0% yoy in 4Q23), both affected by the sharp acceleration of inflation. Capital expenditures plummeted by 48.0% yoy in the period (-21.0% yoy in 4Q23). Energy subsidies decreased by 16.9% yoy, compared with a drop of 10.4% yoy in 4Q23. On the other hand, expenses in social programs fell by 3.8% yoy, while transfers to provinces dropped by 4.3% yoy.
We expect a balanced primary fiscal account (0% of GDP) in 2024, less ambitious than official estimates, which point to a surplus of 2.0% of GDP. Although the beginning of the year was very auspicious for fiscal accounts, we think that it will be challenging for the government to maintain the primary surplus in the midst of a stagflationary scenario.