September 22, 2014
Central Bank helps keep deficit lower
The Treasury yesterday posted a 1.257-billion-peso primary budget deficit for the first quarter of 2014, closer to zero than the red for the same three months last year — 1.458 billion pesos — although that was primarily due to significantly higher injections from the Central Bank (BCRA) in March.
The quarterly primary deficit was recorded despite a 3.570 billion-peso surplus registered during the third month of the year, when the largest chunk of BCRA funds generated from exchange and bond market profits or the printing of money flowed in.
Primary budget performance, which does not account for debt repayments and interest — is more indicative of the fiscal policy of each administration, as it is not skewed by the red-ink incurred by previous administrations.
The figure differs from what private think-tank ASAP reported last week, because the Treasury calculates effective transactions.
Yet the budget deficit is also not what it may first appear.
Without considering the amount transferred from the Central Bank — 12.361 billion, almost entirely coming in March — along with 5.019 billion from the ANSeS social security agency and 365.9 million pesos from fiduciary funds and PAMI, the real primary budget deficit actually weighed in at 19 billion pesos.
That is more than double the 8.3 billion pesos that was recorded during the first quarter of 2013.
The Central Bank injected 12.776 billion pesos into the state’s coffers in March, compared to the 4.146 billion in the same month of 2013.
“To cover the fiscal deficit, the Central Bank is printing more money, which it hopes to absorb with higher interest rates,” IDESA consultancy director Jorge Colina told the Herald.
Debt repayments included, the total budget deficit clocked in at 15.180 billion pesos for the quarter, a figure that would effectively double to above 30 billion pesos if the contributions from the Central Bank, ANSeS and PAMI, worth 17.78 billion pesos during the same three months, would not have existed.
When dollarizing the numbers at hand, the state currently faces an operational deficit of approximately US$3.75 billion.
When looking at March alone, the real primary budget deficit clocked in at 9.371 billion pesos, up just under three billion pesos from the same month of 2013.
In that month last year, the Central Bank’s financial cushion was significantly thinner, but ANSeS actually brought in 2.097 billion pesos, or 1.523 billion pesos more than last March.
Spending vs income
Current revenue thus clocked in at 20.165 billion pesos for the quarter, slightly above the 20.921 billion in current spending for the same period.
Primary spending — not on debt — rose by 35.7 percent in March, continuing its apparently relentless upward march.
“This is largely due to the expenditure through contributions for social security (pensions, raised at the start of the year), current transfers to persons and private companies and remunerations,” the Economy Ministry’s release read. “With regard to resources, the growth seen obeys in great measure to the increase in contributions from Social Security and the increase in tax revenue.”@franma1990