November 23, 2014
The latest fiscal figures are bad enough but the underlying trend is even more disturbing — the government’s New Year resolution to mop up some of the red ink (notably via subsidy cutbacks) is being contradicted by a continuing state activism straying into new areas with the latest examples this week being the extension of the TBA railway line trusteeship and yet another Patagonian province (this time Neuquén) quashing a couple more YPF oilfield concessions as a national proxy. If Aerolíneas Argentinas (losing over a million dollars a day) is considered the paradigm for state enterprise, assuming ever more responsibilities is not the way to save money — or to reach a 2012 primary surplus budget target of 46.25 million pesos when only 4.92 billion was possible last year (with the help of nearly 20 billion from the Central Bank and social security funds).
A fall of 52 percent in last month’s primary surplus as against the previous February and a net surplus of only eight digits (95 million pesos or 90 percent less than February, 2011) should send alarm-bells ringing on this front. Public spending is still growing at almost 30 percent, hardly lower than an average of 35 percent in an electoral 2011 and the previous mostly boom years — the subsidy cutbacks have been suspended in the wake of the Once rail tragedy a month ago tomorrow. Economy Minister Hernán Lorenzino pointed to greater investment in energy infrastructure to justify this spending, as well as using these figures to rebut charges that the provinces are being shortchanged. But this inability to slow down outlay with almost 20 months still to go until the next elections triggers doubts as to whether the government can bring runaway spending under control — or indeed whether it has any wish to, given that this inflationary pace of spending at least produces nominal growth and pads state revenues at the expense of the poorest sectors (it is no accident that the 25.8 percent increase in last month’s revenues since the previous February more or less matches independent estimates of inflation). In any case the fiscal tempo of the last few years creates its own momentum just like any form of acceleration.
Most of the controversy on the economic front these days surrounds import controls — the focus of a press conference yesterday by Foreign Minister Héctor Timerman (trying to change the subject from taking his eye off the Anglo-Peruvian naval connection?) — but perhaps these dull details of Treasury accounts merit the obsessive attention they used to receive during the Néstor Kirchner presidency.