Ir para menu Ir para conteúdo principal Ir para rodapé
2024/01/02 | Andrés Pérez M., Vittorio Peretti & Ignacio Martinez Labra

A steep revenue contraction in November. The central government’s real revenues fell by 15.5% YoY in November (-5.8% in October), contracting for the tenth consecutive month, and leading to an annual cumulative decline of 15.1% (-15.1% through September). As has been the case for most of the year, revenue weakness in November was driven by cyclically sensitive revenues (tributación resto contribuyentes, 78.4% of total monthly revenues), which fell by 17.1% YoY (-1.2% in October). Copper-related revenue was also weak, with revenues from CODELCO falling by 20.6% YoY (-12.8% in October), and revenues from private-mining companies falling by 66.5% YoY (+15.1% in October). Lower prices and weaker production this year have led to a 45.8% YoY real decline in CODELCO’s payouts to the state, and a 47.1% YoY real decline in private-mining company contributions. Relative to the MoF’s 3Q23 forecast, Codelco and private-mining payouts are underperforming the MoF’s annual forecast, at 82.4% and 80% of the respective annual targets (Codelco: 0.5% of GDP, private mining: 1% of GDP) through November. With total real revenues through November having a 15.1% YoY decline, they have reached about 88.7% of the MoF’s annual forecast, below the 90.6% YTD average between 2012-2019, posing headwinds for the MoF to meet the -11.1% annual revenue forecast. 


Expenditures rose again in November. Real expenditures rose by 3.4% YoY in November (9.4% in October), increasing for the second consecutive month after a string of three consecutive monthly declines between July and September. The rise in the month was driven mainly driven by current expenditures (+4.1% YoY in November, +14.3% in October). Payouts in the line related to the state-guaranteed pension program continue to increase (13.9% in November), with one-offs contributing to the monthly rise. Public capital expenditures increased by 0.3% YoY (-14.4% in October), with a 30.1% increase in public investment related to the execution of public works and a 19.4% decline in transfers. Overall, real expenditures have increased by 2.2% YoY through November, up from the 1.3% through 3Q23, yet down sharply decelerating from the 6.9% YoY by the end of 2Q23. Expenditures have reached 87.1% of the MoF's annual forecast, above the 86.4% average for 2012-2019, suggesting the MoF must have compressed current expenditures materially in December – with respect to the seasonal expenditure expansion - to comply with the MoF’s fiscal forecasts. 


Another monthly fiscal deficit. The monthly fiscal balance in November was -0.4% of GDP (0% of GDP in October, -0.1% in November 2022), leading to a YTD balance of -1.6% of GDP (-1.2% as of October, +2.4% as of November 2022). The MoF’s 2023 fiscal balance forecast is of a 2.3% nominal deficit, and 2.6 structural deficit. 


Liquid treasury assets remained at critical levels by end-November. The MoF’s liquid treasury assets (Otros Activos del Tesoro Público) fell to USD1.1 billion by the end of November (USD2.4 billion by the end of October), the lowest end-November balance at least since 2010. The decline in the month was due to a fall in peso-denominated liquid assets (USD835 million, down from USD1.7 billion in October), and dollar-denominated liquid assets to USD301 million, down from USD719 million in October. Assets in the Stabilization Fund reached USD5.9 billion (1.6% of GDP) by the end of November, and the Pension Reserve Fund had USD8.6 billion (2.3% of GDP). 


Very low dollar cash balances. According to the Budget Office’s Monthly Asset report, the MoF's liquid dollar balances by the end of November reached USD301 million down from USD719 million by the end of October. Liquid dollar balances by the end of November are the lowest since the end of January 2022, when they reached USD354.43 million. During December 2023, the MoF sold USD890 million, below the ceiling of the MoF's 4Q23 guidance of up to USD1.25 billion per month, taking the total amount in the year to USD12.2 billion. We estimate dollar sales in 2024 to range between USD8-10 billion. The MoF should announce dollar sales for 1Q24 in the coming days, with low dollar balances preventing a constant participation in sizable amounts, at least until they issue bonds denominated in foreign currency, which we expect to take place during the second half of January.


Challenging fiscal forecasts. Fiscal dynamics this year have been characterized by persistent revenue underperformance and upside revisions to expenditure growth, which have led to a cumulative fiscal deficit through November of 1.6% of GDP. Of note, the monthly fiscal deficit in December seasonally balloons, with 2022 at 1.3% of GDP and 2019 at 1.1%, suggesting that an expansion of just 0.7% of GDP to the MoF’s 2.3% annual forecast seems challenging. December’s fiscal data (to be released by the end of January) would have to reflect a material restraint in current expenditure to compensate for the cumulative revenue underperformance. Liquid assets remained at critical levels through the end of November, suggesting the MoF will issue debt as soon as possible, as the risk of a withdrawal from the Stabilization Fund still remains. 

Andrés Pérez M.

Vittorio Peretti 

Ignacio Martinez Labra