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As was foreseeable, in the first days of the year a strong correction was observed in the primary spending of the national public sector. According to a survey carried out by the consulting firm Analytica, in the third week of January disbursements fell 31% in real terms compared to the same period in 2022.
Although it is true that since Sergio Massa arrived at the Ministry of Economy the government is behaving more orthodoxly in the fiscal field, there is also a base effect of comparison since at the start of 2022 the former minister Martín Guzmán was expanding the costs instead of reducing them.
"In the third week of January, real primary spending fell 18.3% compared to the same week in December and 31% compared to a year ago," says the Expenditure Adjustment Monitor prepared by Analytica. If you delve deeper into the data, pensions and PAMI spending fell 29.6% in real terms. Public Works decreased 66.5%, Goods and Services, 49.3% and transfers to provinces 21.2%. Personnel Expenses decreased to a lesser extent, with 9.7% and Social Programs with 6.6%.
When comparing with what happened last year, the consultant warns that the correction was focused on the expense of retirement and pensions. This is because the bonus that the Alberto Fernández government decreed at the end of 2022 is lower than the one that was granted the previous year. Analytica estimated that the same profit for 2021 "taken in 2022 pesos, was $6,000 million higher than that assigned for the December, January and February quarters."
Meanwhile, the two items of spending that continue to grow in real terms are Family Allowances and the Universal Child Allowance (AUH) with 133.7% in real terms and economic subsidies with 4.2%.
In this regard, the stock exchange company GMA Capital considers that, at least in the first half of the year, the correction of the accounts will continue, due to a seasonal issue. Usually the deficit of the first semester is lower than that of the second.
“If we take the accumulated data for the last 12 months, we can see that since the last maximum in June 2022, spending has adjusted by a real 4.9%. However, it is still 15% above the bottom floor of January 2020," says GMA Capital.
The report says that "due to exclusively seasonal factors, during the first half of the year the deficit is usually less than the last of the previous year." “In fact, it is something that has happened in 6 of the last 7 years, with the exception of 2020, when the pandemic broke out,” the report indicates.
The consultant considers that "the adjustment in subsidies will be deepened." "To take dimension, although (in 2022) it fell by 0.4 percentage points of GDP compared to 2021, it is 1 point above the levels registered towards the end of 2019," says the report.
Meanwhile, one of the items that suffered the greatest cuts last year was Public Investment (IP). Inflation of 96% became the great ally of the Government to liquefy spending: throughout the year the IP amounted to $1.18 trillion, with a drop in real terms of 38.3% compared to 2021 levels, as estimated by the Congressional Budget Office (OPC). The component in which the decrease was most marked was that of Capital Transfers (TC), which with $790,657 million registered a real drop of 46.6%, while Real Direct Investment (IRD) fell 9.9%, with $387,542 million.
Tax collection continues to rise
Meanwhile, this Wednesday the Economy will release the tax collection data for January. The LCG consultancy estimated that it will be around $2.4 trillion with an increase of 109%, marking a growth in real terms of 5.6% per year.
The drivers of this growth would be taxes related to social security and internal activity, which would mark an increase of 123% and 105%. "For all of 2023, we expect revenue to total $37 billion with an average increase of 85%," LCG estimated.
Source: Scope |
