The economic situation makes it difficult to meet the fiscal objectives agreed with the IMF. In the first two months of 2023, the primary result showed a deficit of 0.25% of the GDP; that is, the deficit goal for the first quarter was reached.
For this reason, the balance for March should be completely balanced. In the future, this represents great uncertainty, not only due to the worsening of the economy, but also because the government will have to apply new measures aimed at reducing expenses with a view to meeting the annual fiscal objective, which has not yet changed: 1.9% of GDP. , as indicated by the four revisions published by the IMF in April. All this in the middle of the electoral process.
The fiscal challenge for the whole year
Fulfilling the goal of 1.9% primary fiscal deficit in 2023 would imply, at first sight, only reducing last year’s primary deficit by 0.5 percentage points of GDP, which was effectively 2.4% of GDP. However, in reality the adjustment should be even greater since there are several entries that were made last year that will not be there this year. For example:
- The drought This will bring with it less collection from foreign trade, not only because of less collection from withholdings on exports (the agricultural dollar will generate additional resources for the treasury but in a relatively low magnitude), but also because of less income from import duties since purchases from the abroad will surely be restricted by reducing foreign currency inflows to the country (by an estimated $18 billion compared to last year). These limitations have negative effects on the level of activity, not only in the sector, but also in the rest of the economy, which has already shown signs of recession and led to an annual projection of a 4% drop in GDP. The expectation is a drop in national collection with a floor of 0.9% of GDP
- During 2022, the income from property income from primary emissions began to be recorded as effective income. The agreement signed with the IMF put a ceiling on them when their disproportionate value was noticed compared to previous years. he himself was
of 0.3% of GDP in 2022, resources that added to meet the goal, but they will not be counted this year. - At the end of 2022, the income of extra advances of the income tax was made effective, which added to the national coffers an amount that will not be available in 2023. It was the equivalent of 0.05% of GDP this year.
Enter the following link to see the full report: Without extraordinary measures, the annual fiscal goal will not be met