ANALYSIS OF NATIONAL GOVERNMENT BUDGET EXECUTION – AUGUST 2021

ANALYSIS OF NATIONAL GOVERNMENT BUDGET EXECUTION – AUGUST 2021

Driven by the strong increase in Export Duties, VAT, and Income Tax, in that order, National Government revenues increased by 12.3% in August in real terms year-on-year (YoY).

Mainly because of the increase in capital expenditures and energy subsidies, primary expenditures once again grew above inflation for the second time this year, breaking the opposite trend they had shown in the last five months: 5.0% YoY.

The dynamics between revenues and expenditures resulted in an improvement in real terms of the primary, fiscal, and revenue deficits: he year-on-year comparison showed a decrease of 39.3%, 21.7% and 13.3%, respectively.

  • Social Security contributions grew 4.2% year-on-year. The number of contributors to the system increased but taxable income grew below inflation.
  • Since May, ARS179.285 billion have been collected through the Solidarity and Extraordinary Contribution and ARS65.938 billion have been spent.
  • Subsidies to the Compañía Administradora del Mercado Mayorista Eléctrico (CAMMESA) amounted to ARS102.935 billion with an increase of 126.6% YoY because of the gap between the cost of generation and tariffs and the delay in payment by the electricity distributors.
  • At the end of August, approximately ARS256.75 billion were executed, equivalent to 61.5% of the current appropriation (ARS417.187 billion) to meet the expenses related to the fight against COVID-19.
  • The initial budget for the year was increased by ARS1.015 trillion, with priority being given to social programs, energy subsidies and the procurement and distribution of vaccines.
CONSIDERATIONS ON THE 2022 DRAFT BUDGET PROGRESS REPORT

CONSIDERATIONS ON THE 2022 DRAFT BUDGET PROGRESS REPORT

As of May 31, the National Government accumulated a primary deficit of ARS172.41 billion and a financial deficit of ARS395.35 billion, prioritizing spending on social services, which accounted for 69.1% of total expenditure.

These figures are contained in the 2022 Budget Draft Progress Report sent by the Executive Power to the National Congress at the end of June.

The report states that the fiscal and financial measures to alleviate the effects of the pandemic reached a sum equivalent to 6.5% of the Gross Domestic Product (GDP) in 2020, a proportion that would drop to 1.4% this year, with allocations to protect families and specific sectors.

Debt interest for this year is estimated to be equivalent to 1.5% of GDP. Apart from this, the report does not provide projections for 2021 and 2022.

Among the budgetary policy targets for the coming year are the management of the macroeconomy, the development of the country’s infrastructure, the strengthening of production, active social inclusion with a gender perspective, education, health, and public investment.

ANALYSIS OF NATIONAL GOVERNMENT BUDGET EXECUTION – APRIL 2021

ANALYSIS OF NATIONAL GOVERNMENT BUDGET EXECUTION – APRIL 2021

Because of the increase in resources and the decrease in expenditures, in April the primary and financial deficits fell by 85.2% and 77.4%, respectively, compared to the negative figures for the same month of last year. The economic result was positive by AR$15.97 billion.

These figures do not include the exceptional transfer of profits of AR$230 billion made by the Central Bank to the Treasury in April last year.

  • Tax revenue and Social Security resources grew significantly, by 44.9% and 14.2% year on year (YoY) in real terms, respectively. In both cases, the low comparison base resulting from the Mandatory Preventive Social Isolation (ASPO), which came into effect on March 20, 2020, had an impact.
  • Expenditures related to the COVID-19 pandemic were lower than those of last year and this influenced a drop in primary spending. In this item, social benefits and transfers to provinces fell by 26.8% YoY and 64.9% YoY, respectively.
  • Expenditures on personnel and pensions decreased at rates of 12.9% YoY and 13.4% YoY, respectively.
  • In the first four-month period, 97.4% of the budget allocated to REPRO II, prior to the last budget expansion provided for by Administrative Decision 460/2021 at the beginning of May, has already been executed.
  • In April, the implementation of social programs reached 41.1% of the appropriation allocated for the year, above the general average of 28.1%.
  • During the first four months of the year, the initial approved budget increased by AR$47.9 billion. Among the items that had the largest increases in relation to their initial appropriation were the purchase of vaccines against COVID-19 and logistics and distribution services (AR$29.2 billion), and the REPRO II Program (AR$22.2 billion).
BUDGET BILL 2021 – PRELIMINARY APPROVAL BY THE CHAMBER OF DEPUTIES

BUDGET BILL 2021 – PRELIMINARY APPROVAL BY THE CHAMBER OF DEPUTIES

On October 28, the Chamber of Deputies gave preliminary approval to the National Budget Bill for 2021, after the introduction of several amendments whose impact on total national resources projected is estimated at AR$13.29 billion, which is equivalent to 0.04% of the Gross Domestic Product (GDP).

The amendments introduced represent an increase of expenditures of AR$295.6 billion, of which AR$35.04 will be financed by reductions in budget appropriations foreseen for items defined in the preliminary approval. Therefore, the net increase reaches AR$260.56 billion, equivalent to 0.7% of GDP. This net increase must be financed with reallocations of existing budget appropriations and implemented by means of an Administrative Decision of the Chief of Cabinet of Ministers, as set forth in the Bill.

Economic effects of COVID-19 crisis on gender inequality

Economic effects of COVID-19 crisis on gender inequality

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.

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