The fiscal deficit of 2019 was ARG$846 billion ($14.13 billion), equivalent to 3.9% of Argentina’s GDP, according to the budget execution report published by the Congressional Budget Office (OPC). A higher tax collection and the adjustment over public spending allowed a primary surplus of ARG$5.5 billion or 0.3% of GDP, which implied an improvement of 2.2 percentage points in relation to 2018.
Argentine government reduced the fiscal deficit by about ARG$ 67 billion ($1.12 billion) through a reallocation of budget items that allows a decrease in capital expenditures. The Argentine Budget Association (ASAP) estimated that the current revenues decreased by ARG$1.2 billion, as Fabricaciones Militares (Army factories) were transformed into a State Society, and at the same time consumption expenses were reduced by ARG$1.77 billion.
President Alberto Fernández said he has set a March 31 deadline to renegotiate Argentina’s rampant public debt and that a more “innovative” International Monetary Fund approves of the direction his government is taking.“That is the ceiling we have set, because there are significant maturities,” Fernández said in an interview with the online news site El Cohete A La Luna.
Argentine representative Sergio Chodos takes office this week in Washington as the new director of the Southern Cone before the IMF. During meetings with Kristalina Georgieva and Luis Cubeddu, he will formally present President Alberto Fernández’ proposal for paying off $ 44 billion of the stand-by credit agreed in 2018.
The economy ministry authorised financing worth 5.6 billion pesos ($94 million) for the provinces of Chaco, Chubut, Tucumán, Río Negro and Santa Cruz, and 2bn pesos to the province of Chaco where the local government has faced difficulties to pay salaries for months and forced to underspend on some budget items. The situation is also affecting their capacity to move forward with public works projects.
The Federal Administration of Public Revenue (AFIP) published today in the Official Gazette the regulation of the so-called Tax for an Inclusive and Solidary Argentina (PAIS). The 30% tax will be applied to operations carried out since December 23 in the purchase of foreign currency; payment of goods and services abroad; services provided by non-resident subjects; services abroad hired by travel and tourism agents; international passenger transport; and digital services that are paid in dollars.
The Ministry of Economy will issue today and on January 27 two new Treasury Bills in Argentine pesos (Letes), expiring on February 28, 2020 and the second on May 28, 2020. In both cases they will be tendered at the Badlar rate , plus an additional margin of interest. This month Argentina faces maturities of $ 870 million plus other ARG$ 42 billion corresponding to Lecap and other bonds in pesos.
“In the current context, strict regulations on the exchange rate are inevitable,” Production Minister Matías Kulfas said in an interview with Página 12. The former Central Bank official with close ties to President Alberto Fernández also announced he will begin this week a round of meetings with the productive sector representatives to review the trade agreement between Mercosur and the European Union.
Labour Minister Claudio Moroni confirmed a lump sum 4,000-peso increase for private-sector workers with 3,000 pesos falling due with this month’s wage and the rest in February. It is not considered a bonus since it is to be incorporated into the basic salary. According to Moroni’s calculations, this extra payment will permit the lowest-paid fifth of the workforce or some 1.3 million workers to regain the purchasing-power lost last year.
The Central Bank of Argentina (BCRA) announced that during 2020 it will extend the terms of placement of Leliq as well as the terms of the daily tenders to intervene in “open market” operations. In the “plans and objectives for 2020” published on their website, the monetary authority also includes maintaining flotation of the peso with the current exchange regulations and stimulating the supply of credit to the private sector.