Nicolas Perez - Oficina de Presupuesto del Congreso

THE OPC PRESENTED THE LATEST BUDGET EXECUTION REPORT TO LEGISLATORS

by Nicolas Perez | Feb 16, 2024 | Activities

The Argentine Congressional Budget Office presented the latest published report on the Analysis of the National Government Budget Execution – January 2024 to national legislators and their advisors.

This is one of the periodic works conducted by the OPC with the purpose of monitoring revenues collected and expenditures accrued.

The presentation was given by the OPC Director, Gabriel Esterelles, together with the directors of Sustainability and Public Debt Analysis, Joel Vaisman; of Fiscal and Tax Analysis, Martín López Amorós; of Budget Analysis, Ignacio Lohle, and the analyst of this last directorate, María Laura Cafarelli.

The purpose of the online meeting was to provide members of the Chamber of Deputies and the Senate, as well as their assistants, with technical elements to improve the understanding of the monthly report disseminated through the OPC web page, offering, at the same time, the possibility of clarifying doubts about the methodology used and the results obtained.

The good reception of this new work modality was the basis for the decision to repeat it periodically to consolidate the technical dialogue between the OPC and the National Congress.

ANALYSIS OF NATIONAL GOVERNMENT BUDGET EXECUTION – JANUARY 2024

by Nicolas Perez | Feb 9, 2024 | Budget Execution

During January, the National Government recorded a financial surplus 77.2% higher than that obtained in the same month of the previous year. This was the result of a greater decrease in expenditures, mainly related to social benefits, than the drop in tax revenues.

The primary surplus, which does not include interest payments, was 105.2% higher than a year earlier.
Total revenues contracted by 1.3% in the year-on-year comparison, driven by the fall in Social Security contributions
(-26.5% YoY) and Income Tax (-40.3% YoY), partially offset by increases in the PAIS Tax (411.6% YoY) and in Export Duties (88.5% YoY). Partly due to the improvement in the exchange rate, partly due to regulatory changes.
Total National Government expenditures recorded a real fall of 11.9% YoY in the first month of the year, and the cut in primary expenditures reached 30.8% YoY.
Pensions (-32.5% YoY), social programs (-59.6% YoY) and personnel expenses (-18.0% YoY) were the items that most contributed to the reduction in expenditures. The absence of records for some programs had an impact on the item social programs.
However, debt interest grew 139.1% YoY, basically due to the payment of coupons on bonds issued after the restructuring.
Transportation subsidies increased 144.9% YoY, mainly due to subsidies to urban rail services.
In contrast to January 2023, no expenditure was recorded for energy subsidies.

ANALYSIS OF NATIONAL GOVERNMENT BUDGET EXECUTION – JANUARY 2024

ANALYSIS OF BILL “BASES AND STARTING POINTS FOR THE FREEDOM OF ARGENTINES” – REPORT 8 – NEW PENSION BENEFIT ADJUSTMENT FORMULA

by Nicolas Perez | Jan 23, 2024 | 25-PE-2023_ENG, Cost Estimates

The change proposed by the National Executive Branch implies adjusting the pension benefits by the current formula in the first quarter of the year and by the Consumer Price Index (CPI) as from April.

Applied to the year 2023, the formula currently in force results to be less beneficial.
The current formula resulted in a 32.2% deterioration of the purchasing power of pensions whereas the formula proposed by the Executive Branch would have reduced this loss to 22% YoY.
This calculation does not include bonuses but only the automatic application of the adjustment mechanisms.
If inflation were to decelerate during 2024, pensions would lose in the first quarter but would then tend to recover.
If no bonuses had been granted, the National Social Security Administration (ANSES) would have recorded a surplus equivalent to 0.2% of GDP last year instead of a deficit of 0.3%. With the proposed formula, the fiscal cost would reach 0.7 p.p. of GDP due to the higher expenditure on pension benefits.

ANALYSIS OF THE ADMINISTRATIVE DECISION ON THE ALLOCATION OF THE NATIONAL GOVERNMENT BUDGET EXTENDED FOR 2024

by Nicolas Perez | Jan 19, 2024 | Budget Law

The 2024 Budget, which is the result of extending that of fiscal year 2023, increases the financial deficit by ARS158.596 billion, due to the adjustments in resources (-ARS320 billion) and expenditures (-ARS161.404 billion) by means of Administrative Decision No. 5.

Revenues are cut by ARS320 billion, funds related to the awarding of 5G service licenses.
A total of ARS108.092 billion was cut for election expenses, ARS500 million from the Supreme Court’s budget for maintenance and ARS52.812 billion for transfers to provincial pension funds.
Administrative Decision No. 5 provides for institutional adjustments due to changes in the government’s organizational structure.

ANALYSIS OF NATIONAL GOVERNMENT BUDGET EXECUTION – YEAR 2023

by Nicolas Perez | Jan 17, 2024 | Budget Execution

During 2023, the National Government reduced its primary deficit by 0.3 p.p. of GDP and its financial deficit by 0.4 p.p. with respect to 2022. Such dynamics was the result of a contraction of primary expenditures (-7.0%) greater than that of resources (-5.9%).

Total resources fell by 5.9% due to lower revenues from Export Duties (-57.0% YoY) and Income Tax (-21.5% YoY), partially offset by higher revenues from PAIS Tax (+118.0% YoY) and VAT (+8.2% YoY).
Tax revenues reached 9.4% of GDP, 1.0 p.p. below 2022.
Non-tax revenues amounted to ARS308.651 billion from the awarding of 5G licenses, which boosted the increase (+61.2% YoY).
The largest declines in primary expenditures were recorded in Pensions (-6.1% YoY), Family allowances (-31.1% YoY), Energy subsidies (-26.5% YoY) and Capital expenditures (-12.9% YoY).
The purchasing power of pensions and family allowances was reduced by an average of 16.3% YoY, due to the application of the benefit adjustments under the “mobility formula”.
There was a lower financial assistance to CAMMESA (-34.8% YoY) and to ENARSA (-2.3% YoY), within the framework of the tariff segmentation policy implemented during 2023 and a lower value of natural gas imports, due to lower quantities and prices.
On the other hand, personnel expenses (+8.5% YoY), current transfers to provinces (+8.1% YoY) and transfers to universities (+6.2% YoY) increased.
Current appropriations increased by 39.3% during the year: transfers to provinces and social programs had increases above this annual average. Seventeen amendments were made, including two by means of Necessity and Urgency Decrees (DNU), which accounted for 83.1% of the increase in expenditure.

ANALYSIS OF NATIONAL GOVERNMENT BUDGET EXECUTION – YEAR 2023

ANALYSIS OF BILL “BASES AND STARTING POINTS FOR THE FREEDOM OF ARGENTINES” – REPORT 7 – TAX MEASURES – SECOND PART

by Nicolas Perez | Jan 17, 2024 | 25-PE-2023_ENG, Cost Estimates

The analysis refers to a set of sections that create a new regime for the regularization of assets, modifies the Wealth Tax and the Internal Taxes on cigarettes.

The proposed regularization, for residents and non-residents, would allow formalizing of assets up to USD100,000 without being taxed and, starting from that base, it provides for a tax to be settled in U.S. dollars.
If the “laundering” is of cash transferred to the Special Account for the Regularization of Assets, the tax will not apply.
The amount collected under the Asset Regularization Regime does not have a specific allocation, so its revenue would be shareable with the provinces.
It creates the Special Income Regime for Wealth Tax, establishing a scheme for the advance payment of five fiscal years.
The tables applicable to the Wealth Tax for assets in Argentina and abroad are unified and the maximum tax rate is reduced by 30%. In the future, a single rate of 0.5% will apply.
With the same stock of taxable assets in 2023, the collection in terms of GDP would drop from 0.68 to 0.19% over the next five fiscal years.
The ad valorem tax rate on cigarettes is increased by 4.29% (from 70% to 73%), and the minimum tax is eliminated.