NATIONAL GOVERNMENT FLOATING DEBT

NATIONAL GOVERNMENT FLOATING DEBT

Government administration procedures in the management of spending, purchases and procurements often determine a term of duration between accrued liabilities and their effective cancellation. At any given time, accrued liabilities that have not yet been paid constitute floating debt.

Floating debt is a government liability, as far as it represents outstanding liabilities that are certain. However, under argentine regulations it is not part of public debt, which is debt instrumented through the issuance of securities and the borrowing of loans. Therefore, it is not included in public debt statistics.

Outstanding liabilities comprise those within their term of payment and those already matured (arrears) which involuntarily or intentionally were not canceled at their maturity date. Excessive accumulation of arrears has negative consequences for government operations and the functioning of the economy.

The annual volume of accrued liabilities that remained outstanding at year-end reached 6.7% of the total accrued liabilities in 2013. The ratio declined to a minimum of 3.7% in 2017, and then reversed the declining trend in recent years, reaching 4.5% in 2019. In relation to GDP, outstanding liabilities ranged between 0.7% and 1.4% of GDP since 2012. On average, 97% of the floating debt was paid during the first year following the accrual that originated it.

FISCAL IMPACT OF BILL TO CREATE THE PROGRAM “PATRIA”

FISCAL IMPACT OF BILL TO CREATE THE PROGRAM “PATRIA”

The Bill creates the program PATRIA with the purpose of promoting air routes throughout the national territory. For the implementation of the program, Líneas Aéreas del Estado (LADE) will be the implementing and executing entity and will use Air Force aircraft and personnel. For its part, the Ministry of Defense will provide maintenance service and new equipment for the aircraft.
The fiscal effect of the program is estimated based on three scenarios:

  1.  The program covers maintenance, fuel, and pilot training cost; and revenues from the sale of tickets would cover LADE’s operation costs. A cost of AR$1.33 billion for 2021, and AR$2.01 billion was estimated for 2022.
  2. The program covers maintenance costs, 75% of fuel, and 75% of pilot training costs; and revenues from the sale of tickets would cover 25% of fuel, pilot training costs y and LADE’s operation costs. A cost of AR$1.15 billion for 2021, and AR$1.74 billion was estimated for 2022.
  3. The program covers maintenance costs, and revenues from the sale of tickets would cover 50% of fuel, pilot training, and LADE’s operation costs. A cost of AR$1.01 billion for 2021, and AR$1.55 billion was estimated for 2022.
TAX EXPENDITURES – METHODOLOGICAL ISSUES AND ANALYSIS OF 2021 BUDGET

TAX EXPENDITURES – METHODOLOGICAL ISSUES AND ANALYSIS OF 2021 BUDGET

Due to tax exemptions and promotional regimes, the Budget Law estimates that next year’s tax expenditure will be AR$995.8 billion, equivalent to 2.64% of GDP, a level comparable to that of this year.

Of this total, 73.9% consists of special tax treatments included in the current tax legislation (AR$735.7 billion) and the rest is for various economic promotion regimes (AR$260.1 billion).

  • For 2020, total tax expenditures are expected to reach AR$714.7 billion, equivalent to 2.63% of GDP and with a similar composition.
  • In the projection for next year, lower VAT collection stands out, with a total of AR$444.3 billion (1.18% of GDP); more than half of it is due to reduced rates on meat and vegetables.
  • Fuel Tax is the second largest tax expenditure, with AR$132.7 billion, mainly explained by the difference between the rates applied to gasoline and diesel fuel (AR$83.36 billion).
  • Nearly half of the reduced income tax collection (AR$85.5 billion) is due to the exemption applicable to the income of judges and officials of the national and provincial Judiciary.
  • The two promotional regimes with the highest tax expenditure are those of the province of Tierra del Fuego (AR$77.8 billion) and Knowledge Economy (AR$18.4 billion).

The deferral of tax payments, the accelerated amortization in Income Tax and early refund of tax credits in VAT are not considered tax expenditures; these measures are mainly contained in different promotional regimes.

PUBLIC DEBT OPERATIONS – NOVEMBER 2020

PUBLIC DEBT OPERATIONS – NOVEMBER 2020

The equivalent of USD4.44 billion of principal of marketable government securities was canceled in November, of which AR$311.76 billion (USD3.87 billion) were cash payments and the rest swap transactions.

Four bonds and bills auctions were held resulting in the placement of instruments in pesos for an original face value that totaled AR$361.94 billion, and two auctions with in-kind subscription that resulted in the placement of bonds in dollars for USD750 million and securities in pesos for a total AR$179.47 billion in original face value, respectively, the latter being settled in December.

In addition, on November 25, the first acceptance period for the swap of foreign currency government securities issued under argentine law that were excluded from the restructuring completed last September, ended. A total of USD31 million (USD33 million original face value) was swapped.

During the month, interest payments for the equivalent of USD848 million were made, 56% of them in pesos. The payment of interest on fixed-rate BONTE for AR$26.27 billion (USD326 million) stands out.

Debt service maturities are estimated for the equivalent of USD3.99 billion in December, which is reduced to approximately USD2.57 billion if holdings within the public sector are excluded.

ANALYSIS OF NATIONAL GOVERNMENT BUDGET EXECUTION – NOVEMBER 2020

ANALYSIS OF NATIONAL GOVERNMENT BUDGET EXECUTION – NOVEMBER 2020

During the month of November, total revenues of the National Government showed an expansion in real terms of 27.0% year on year (YoY) because of the transfer of profits from the Central Bank of Argentina (BCRA) to the National Treasury in the amount of AR$150 billion. If these resources are excluded, total revenues would have fallen by 7.4% YoY.
Tax revenues fell 6.0% YoY, and the 31.1% YoY increase in Income Tax revenues failed to offset the drop in VAT (4.5% YoY) and Export Duties (46.0% YoY).
Primary expenditures (after adjustment of capital expenditures executed in previous years) had, for the first time since March, a variation of less than two digits (1.7% YoY).Considering debt interest (-39.6% YoY), total expenditures in November fell by 18.4% YoY.
By the end of November, AR$32.8 billion of expenditures related to COVID-19 were recorded.
The primary balance shifted from a deficit of AR$105.5 billion in November 2019 to a monthly surplus of AR$57.1 billion in November 2020. The negative financial balance decreased from AR$186.6 billion to AR$9.8 billion.
However, if exceptional revenues, such as transfer of profits from the Central Bank to the Treasury, and expenditures recorded in 2019 that belong to previous fiscal years are not included, November’s primary deficit is equivalent to AR$92.9 billion, which implies a 77.4% deterioration compared to the one recorded in the same period of 2019.
The Pensions item had a contraction of 5.2% YoY due to the decrease in the number of beneficiaries of the system and the benefit mobility policy.
Economic subsidies (AR$60 billion) had a real YoY increase of 19.6%, basically due to those related to energy.
The initial budget for the fiscal year increased by AR$2,7 trillion and 62.9% of this amount was allocated to reinforce social benefits.
Executed expenditure as of November 30 represents 80.6% of current budget appropriation.

FISCAL IMPACT OF BILL TO CREATE THE PROGRAM “PATRIA”

ANALYSIS OF NATIONAL GOVERNMENT BUDGET AMENDMENTS – 2020

The Budget Law passed by the National Congress is amended during the year in accordance with the delegation of powers arising from the regulations in force. Within this framework, it is important to analyze such amendments to provide updated data on the budgetary dynamics throughout the fiscal year.

To this end, these periodic reports focus on the analysis of budgetary amendments made by administrative decisions of the Chief of Cabinet of Ministers (JGM) or by Necessity and Urgency Decrees (DNU).

Downloads 2020 (Only in Spanish)

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