Juan Carlos Barboza & Diego Ciongo
Argentina’s treasury ran a primary deficit of ARS 502.1 billion in December, compared with a deficit of ARS 496.3 billion one year earlier. We estimate that the primary deficit in 2022 narrowed to 2.4% of GDP, from 3.0% in 2021.
Tax revenues declined in 4Q22. Tax collection fell by 0.9% yoy in real terms in the period, down from a 6.8% gain in the previous quarter due to a sequential decline in activity. Total revenues decreased by 1.6% yoy in the period.
Primary expenditures saw a significant decline in real terms for the quarter ended in December. Primary expenditures fell by 14.5% yoy in real terms in the period, from a drop of 3.6% in 3Q22. Energy subsidies decreased by 43.1% yoy, from a decline of 11.10% in 3Q22). Transfers to provinces declined by 31.0%, from a 17.7% drop in the quarter ended in September. Pension payments decreased by 9.6% (from -3.9%), while payroll payments increased by 0.4% yoy in real terms, after growing 0.6% in the previous quarter. Finally, capital expenditures fell by 4.1% yoy (from an increase of 52.9% previously).
We believe that it will be challenging to reduce the fiscal deficit in 2023 – as agreed to with the IMF – due to the electoral cycle and the expected contraction in activity. We forecast a primary fiscal deficit of 2.8% of GDP for this year.
Juan Carlos Barboza