Juan Carlos Barboza & Diego Ciongo
23/02/2023
Argentina’s treasury ran a primary deficit of ARS 203.9 billion in January, compared with a deficit of ARS 16.7 billion one year earlier. We estimate that the 12-month-rolling primary deficit remained at 2.4% of GDP.
Tax revenues declined in the quarter ended in January. Tax collection fell by 3.2% 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 3.6% yoy in the period.
Primary expenditures declined in real terms during the quarter ended in January. Primary expenditures fell by 9.1% yoy in real terms in the period, from a drop of 14.5% in 4Q22, likely due to regularization of pending payments. In fact, expenses on social programs increased by 16.0% yoy in the period, from a decline of 11.6% in the quarter ended in December. Energy subsidies decreased by 43.4% yoy, from a decline of 43.1% in 4Q22. Transfers to provinces declined by 21.2%, from a 31.0% drop in the quarter ended in December. Pension payments decreased by 9.0% (from -9.6%), while payroll payments increased by 3.7% yoy in real terms, after growing 0.4% in the previous quarter. Finally, capital expenditures increased by 1.0% yoy (from a drop of 4.1% previously).
To reduce the fiscal deficit in 2023 – as agreed to with the IMF – is challenging in our view, 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
Diego Ciongo