Juan Fourcaud - Oficina de Presupuesto del Congreso

NATIONAL GOVERNMENT FINANCIAL REPORT 2019

by Juan Fourcaud | Aug 11, 2020 | Financial Report

National government budget execution showed an operating surplus of AR$61.7 billion but resulted in a financial deficit of AR$865.9 billion when debt interest is added, which implies a deviation of 44.2% compared to the initial budget forecasts for the year 2019.

Total expenditure increased more than total revenue compared to the budget forecast (14.1% vs. 9.1%), mainly because of transfers to the provinces and energy sector; and to the remission of profits from the Central Bank to the Treasury for AR$204.24 billion during the year, respectively.

If the profits remitted from the Central Bank had not entered the National Treasury, the primary result of fiscal year 2019 would have gone from a surplus of AR$61.7 billion to a deficit of AR$142.54 billion, and the financial balance from a deficit of AR$865.9 billion to a deficit of AR$1.07 trillion.

In 2019, the execution of debt interest exceeded the initial appropriation by 25.3% ($187.03 billion).
Within tax revenues, the increase of Export Duties, of 164.5% YoY in real terms, compared to 2018, stands out.
Revenues from the Sustainability Guarantee Fund increased 35.5% YoY in real terms compared to 2018.
Government wages dropped 11.7% YoY in real terms and Social Security benefits dropped 6.1% YoY.
The increase in the initially approved budget was of AR$755.87 billion, 93.6% of which was covered with emergency decrees (DNU).
As of December 31, 2019, the stock of national public debt totaled USD321.67 billion, showing a decrease of USD8.9 billion over the year. In terms of GDP, debt increased 4% to reach 89.0% of GDP.
Measured in pesos, the debt stock showed an increase of AR$6.8 trillion during the year.
A primary deficit of 1.9% of GDP in 2018 turned into a surplus of 0.3% in 2019. Debt interest raised from 3.7% to 4.3% compared to GDP. It is observed that the financial balance went from a deficit of 5.6% of GDP in 2018 to a deficit of 4.0% in 2019.

ANALYSIS OF NATIONAL PUBLIC INVESTMENT BUDGET EXECUTION – 2019

by Juan Fourcaud | Jul 17, 2020 | Budget Execution

Public Investment executed during 2019 totaled AR$251.52 billion which, after adjusting for AR$67.28 billion of advances to suppliers included last year asset adjustment of Real Direct Investment, amounted to AR$184.24 billion (-29.7% real variation YoY). This is explained by the reduction of capital transfers (-39.7% YoY), which could not be offset by the increase in Real Direct Investment (2.1% YoY) so public investment measured as a proportion of total expenditure (3.94%) and GDP (0.85%) dropped in 2019.

The current appropriation was 15.6% lower than budgeted in real terms, execution level was at 82.8%, and the average value was AR$4,100 per capita, implying a drop compared to 2018 in real terms.

Expenditure on Real Direct Investment totaled AR$ 87.06 billion in 2019, of which 89.5% were investment projects and 10.5% acquisition of capital goods, with an implementation level of 79.7% and 64.0%, respectively. The drop in Real Direct Investment was of -13.8% YoY in real terms, compared to 2018, given that the decrease in the acquisition of capital goods (-62.9%) could not be offset by the increase of investment projects (+2.1%).

Last year ended with 782 projects with positive current appropriation for AR$97.75 billion, 50% of which were concentrated in 14 projects (1.8%). Only one work comprised 96.5% of them and the rest contained multiple works bringing the total to 840.

The 50 most important works accounted for 72.3% of current appropriations and the financial investment reached 79.4%, a level comparable to the average. The physical execution of these 50 works was highly variable, as the initial programming ranged from 0% to 100%, with an average of 34.9%, while the executed works ranged from 0% to 81.1%, with an average of 17.4%. Of the 840 investment projects under execution, 43.7% showed a minimum degree of physical progress and 19.8% showed a high degree of progress.

On the other hand, 70.4% of works have started in previous years, and 10.8% started in 2019, and the projected duration of works is on average 5.9 years, although concentrated in the range of projects of 5 to 6 years and 1 to 3 years.

In 2019, there were 250 investment projects for the Plan Belgrano with a current appropriation of AR$14.8 billion (-26.3% real variation YoY) and expenditures for AR$16.76 billion, of which 57.7% were incurred by the Northwest region and 42,3% by the Northeast region.

Analysis of Bill on Gender Responsive Budgeting (S-0268/2020)

by Juan Fourcaud | Jun 19, 2020 | Cost Estimates

Gender Responsive Budgeting (GRB) provides a vehicle for determining the effect that government policies have on the achievement of gender equality and thus provides valuable information to policymakers.

To that effect, Bill S-0268/2020 provides for the implementation of gender perspective in public budgets. To review the Bill a two-level approach is made: on the one hand, the main conceptual and methodological aspects to be considered when implementing gender perspective in public budgets, and on the other hand, technical suggestions for amendments to Law No. 24,156 on Financial Administration and Control Systems of the National Public Sector.

Economic effects of COVID-19 crisis on gender inequality

by Juan Fourcaud | Apr 22, 2020 | Gender

Women and men have differentiated positions in the economic and social reality, which means that crises, such as the current one caused by Covid-19, will have different impacts.

The informal sector of the economy will be the most affected with job losses and a substantial loss of income. Within this sector, domestic service (that generates a similar number of jobs as construction) takes a prominent place, since it represents 25% of unregistered jobs. The decline in activity in this sector, because of social distancing measures, directly affects women, who represent 97% of those employed in private homes.

ECONOMIC EFFECTS OF COVID-19 CRISIS ON GENDER INEQUALITY

Fiscal federalism in Argentina. Latest developments in historical perspective

by Juan Fourcaud | Mar 4, 2020 | Tax Policy and Fiscal Federalism

A review of the country’s fiscal federalism reveals the complexity of its parameters and the difficulties to establish a definitive consensus-based regime between the national government and the provinces, a constitutional mandate that has been pending for 23 years.

The federal tax co-participation regime was established by Law No.12,139 of 1935. The regulatory dispersion continued until the integration set forth in Law No.20,221 in force until 1984, recurrently infringed.

Among the decisions that infringed that law was the unilateral transfer of education and health functions to the provinces, without the respective financial allocations. This was the origin of the National Treasury contributions, an arbitrary mechanism to remedy problems as those caused by that discretionality. In 1980 pre-co-participations were introduced when it was decided that a portion of the VAT would be use for Social Security.

At the beginning of 1988, Law No.23,548 established a temporary distribution regime still in force. The secondary distribution scheme is not based on objective criteria and the original primary distribution, which reserved 54% to the provinces, was permanently altered.

The 1994 constitutional reform included co-participation in the National Constitution and provided for the enactment of a framework law before the end of 1996.

This mandate has not yet been accomplished and the most concrete legal approach was the series of fiscal pacts signed since 1992, whose interpretation and implementation led to legal disputes: federalism of concertation in our country lacks legal certainty.

Guidelines for the preparation of the macroeconomic scenario

by Juan Fourcaud | Feb 4, 2020 | Other Publications

The purpose of this document is to outline the main methodological aspects and the technical tools used for the preparation of the macroeconomic scenario adopted by the OPC in the framework of the report “Revised Estimates – 2020 Budget Bill”.

The approaches included in this document are not intended to specify a closed macroeconomic model, to investigate the causal processes of the phenomena under study or to provide certainty for future budgetary outcomes. Rather, it seeks to contribute to the analysis of how the argentine economy and public budget will evolve if the current economic policy and the same conditions are to remain unchanged.

Macroeconomic variables play a fundamental role in the design of budgetary policy as they are closely linked to the revenues and spending estimates (and financing needs) included in the Budget Bill.

Making short, medium, and long-term projections of significant national macroeconomic variables allows, among other things, producing independent analyses of the impact of these variables on the public sector balance sheet, forecasting their future evolution for multi-year horizons, as well as conducting studies on the intertemporal sustainability of the national public debt.