As a result of the lower economic activity caused by the coronavirus pandemic, the national public sector registered in May a primary deficit of $251,287 million, which is equivalent to just over 10% of GDP, as reported by the Ministry of Finance.
If the interest payment of the debt is taken into account, the fiscal red rose last month to $ 308,219 million. The numbers mark a sharp deterioration in the fiscal accounts, which were covered by the contribution of $ 430,000 million from the Central Bank. To compare, the primary result in May 2019 had given a surplus of $ 25,974 while the financier had shown a loss of $ 38,634 million. The numbers show a deterioration that was multiplied by 10.
Total income of $ 328.120 million was recorded in May, reflecting the sharp drop in tax collection in May, the second full month of quarantine. There were drops of 36.2% of export duties, 7.9% of VAT collection and 5.1% of tax on debits and credits, among other charges affected by the lack of activity. On the expense side, growth was just over 95% compared to May last year, mainly to attend to programs to help people and companies, in addition to covering the drop in co-participation with the provinces. Thus, the primary expenditures were $ 579,507 million.
In this regard, the chief economist of the Orlando Ferreres Center for Economic Studies, Fausto Spotorno, pointed out that the deficit figure “is more or less about $ 3.6 billion at the official exchange rate, which represents about 10% of the PBI ”. Spotorno warned in this regard that “a monthly deficit of this magnitude cannot be sustained”, whose financing is exclusively covered by money issuance. In this sense, the economist stated that the magnitude of the deficit is “explosive”, although he expressed his expectation that in the coming months the activity could improve. In this sense, he considered that the Metropolitan Area (AMBA) “represents half of the economy” and that is why it is important that it can be implemented as soon as possible and leave behind the effects of social isolation.
Similarly, the economist at the Center for the Implementation of Public Policies for Equity and Growth (CIPPEC), José Gasparín, also considered that an improvement in activity could moderate in the following months the result of the state accounts and thus decrease the assistance of the Central Bank. “It must be taken into account if the greater activity in the interior could have brought about the collection” during the current month. The specialist estimated in a recent CIPPEC report that between March and May the Central Bank has contributed $ 800,000 million to the National Treasury.
On the other hand, the economist of the Fundación Libertad y Progreso, Aldo Abram, explained that a large part of the resources that the BCRA transferred to the Government “were made around the end of May, so that they will impact the data for June “
According to official information, the Government spent in May $ 80,000 million for the Emergency Family Income (IFE) and the Emergency Assistance Program for Work and Production (ATP).
Transfers to the provinces marked a notable advance and reached $ 53,327 million, mainly explained by Contributions from the National Treasury (ATN) for almost $ 11,000 million, food reinforcements to canteens and toilets to provincial hospitals for almost $ 4,500 million, and expenditures of $ 3,800 million intended to reinforce the provincial pension funds not transferred to SIPA.
At the same time, social security benefits totaled $ 193,767 million, thus marking a year-on-year growth of 43.4% as a result of the provisions of Decree No. 163/2020.
By Carlos Lamiral for ÁMBITO FINANCIERO