Argentina’s treasury ran a primary deficit of ARS 228.1 billion in February, compared with a deficit of ARS 76.3 billion one year earlier. Thus, we estimate that the 12-month-rolling primary deficit widened to 2.4% of GDP from 2.3% in December 2022.
Tax revenues receded in the quarter ended in February, mostly due to lower export tax collection. Tax collection fell by 5.5% yoy in real terms in the period, down from a 0.9% loss in 4Q22 due to the drop in trade-related taxes and the impact of a sequential decline in activity on the rest of the taxes. Total revenues decreased by 4.3% yoy in the period.
Primary expenditures continued falling in real terms during the quarter ended in February. Primary expenditures fell by 8.2% yoy in real terms in the period, from a drop of 14.5% in 4Q22. Expenses on social programs increased by 23.5% yoy in the period, from a decline of 11.6% in the quarter ended in December. Energy subsidies decreased by 38.4% yoy, from a decline of 43.1% in 4Q22. Transfers to provinces declined by 23.4%, from a 31.0% drop in the quarter ended in December. Pension payments decreased by 9.5% (from -9.6%), while payroll payments increased by 3.4% yoy in real terms after edging up 0.4% in the previous quarter. Finally, capital expenditures increased by 14.0% yoy (from a drop of 4.1% previously), mainly due to the construction of the Nestor Kirchner gas pipeline.
Our recent 2023 GDP revision (to -3.0% form -1.5% before) due to the worse-than-expected drought led us to revise our forecast for the primary fiscal deficit to 3.0% of GDP for this year, from 2.8% in our previous scenario.
Juan Carlos Barboza
Diego Ciongo