Sunday, March 13th 2016 - 22:49 UTC

Argentina's government release of 2015 fiscal results triggers strong controversy

Argentina's Finance Ministry finally released its fiscal results for the 2015 period, which showed a deficit amounting to more than 5% of GDP. The figure is likely to be subject to much controversy and discussion, as the government of president Mauricio Macri introduced new methodology to calculate its figures.

The Macri government said that 291 billion pesos were registered as 2015 deficit, 1.6 percentage points more of GDP when compared to the 3.8% of GDP in 2014.

In January however, Prat-Gay had said that the Let’s Change administration was facing the challenge of turning around a deficit that amounted to 7.1% of GDP.

Kicillof said that under the old methodology the deficit only amounted to 2.3% of GDP, and Prat-Gay was trying to play it up to implement an austerity program.

Prat-Gay has said that he is planning to reduce the deficit to 4.8% of GDP by the end of this year, 3.3% by 2017, 1.1% by 2018 and 0.3% by 2019.

 The results could also re-ignite a feud between Finance Ministry Alfonso Prat-Gay and former Economy minister Axel Kicillof, who clashed in January over the magnitude of the financial difficulties that president Macri’s administration inherited from former head of state Cristina Fernández.

The government said that 291 billion pesos were registered as a deficit in 2015, 1.6 percentage points more of GDP when compared to the 3.8% of GDP in 2014.

Income grew by 287 billion pesos throughout 2015, while expenses were up 410 billion pesos, resulting in an additional loss of 123 billion pesos in the yearly comparison.
The Macri administration says that the deficit inherited will make it hard to achieve its target of reducing inflation rapidly, as it forces the Central Bank to finance the Treasury by printing more pesos. Macri promised to reduce inflation gradually in the next four years.
In January however, Prat-Gay had said that the Let’s Change administration was facing the challenge of turning around a deficit that amounted to 7.1% of GDP.
According to the Minister’s adviser, Vladimir Werning, “the difference is because Prat-Gay at the time included the cost of the transition, to paint a clear picture of what our starting point was”.
That 7.1% deficit however included some of Macri’s campaign promises as part of the “inheritance” that his administration had to reverse, prompting accusations of distortion from Kicillof.
The former minister however claims that the deficit was even lower than 5% of GDP under his administration. His contrasting position is a result of a crucial difference in the new methodology used to calculate the figure, which was made official by Prat-Gay’s Ministry.
The government’s new way excludes cash transfers from Central Bank’s utilities or from the ANSES social security agency’s FGS sustainability funds from the Treasury’s accounting results.
“Starting in December 2015, (the results) will reflect some adjustments with the goal of eliminating accounting practices that, in the past, have contributed to distorted fiscal results,” the Finance Ministry’s press release said.
The ministry said that the transfer of Central Bank utilities were ultimately financed by the printing of money, leading to increased inflation statistics. It also argued that ANSES’ funds should be kept separately as a matter of financial prudence.
In contrast, Kicillof argues that such changes are not justified, since the previous methodology was in line with the recommendations of organisms such as the International Monetary Fund (IMF).
Kicillof said last month that under the old methodology the deficit only amounted to 2.3% of GDP, and that Prat-Gay was trying to play it up in order to implement an austerity program.
The Finance Ministry also filed its fiscal results for January, which showed a marked improvement from a year ago, but economists think it will be hard to sustain.
Only 548 million pesos were in the red in January 2016, a deficit almost 90% smaller than in 2015. Much of that improvement however comes from an abnormally high January income tax collection figures, explained by the massive profits reaped by banks and individual investors through the controversial dollar future contracts sales over the last months of the Kirchnerite administration.
February’s tax collection figures were already poorer than January’s, and cuts to income tax could exacerbate that, making the deficit grow. Prat-Gay has said that he is planning to reduce the deficit to 4.8% of GDP by the end of this year, 3.3% by 2017, 1.1% by 2018 and 0.3% by 2019.

15 comments Feed

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1 Marti Llazo (#) Mar 13th, 2016 - 10:59 pm Report abuse
Higher deficits, hyperinflation, major currency devaluation, civil disturbances, and another default, coming up. Film at 11.
2 chronic (#) Mar 14th, 2016 - 12:28 am Report abuse
Who in their right mind would be surprised? This is the tip of the iceberg.
3 Skip (#) Mar 14th, 2016 - 05:00 am Report abuse
I don't think there is another default coming up. Investors much prefer the truth because then they can factor that into their calculations.

This government is at least telling the truth and willing to tackle issues as they occur instead of kicking the can down the road. I expect the finances to look dismal this year as the full facts of CFK's last year in power finally flow through.

I will be interested to see revised statistics going back the last few years when they are done as they will show the lack of growth and the full cost of inflation.
4 CapiTrollism_is_back!! (#) Mar 14th, 2016 - 06:33 am Report abuse
@1

And yet you are still F&$#*ng living here?

What are you trying to win with the post? World's most moronest Moron of the worldwide World award?
5 Jo Bloggs (#) Mar 14th, 2016 - 06:49 am Report abuse
4 LOL

Pot, kettle.
6 Roger Lorton (#) Mar 14th, 2016 - 08:57 am Report abuse
Lies, damn lies and statistics ............ and Argentina of course, where truth and fiction so often merge. What say you Think? Viveza criolla ? What? :-)
7 CapiTrollism_is_back!! (#) Mar 14th, 2016 - 10:05 am Report abuse
@6

As if anyone believes the British are credible in anything.
8 Mendoza Canadian (#) Mar 14th, 2016 - 11:00 am Report abuse
Did cfk and her pet dog dannyboy really think they would be able to cover this up if they had won the election? Jesus....................
9 Lucifer (#) Mar 14th, 2016 - 11:25 am Report abuse
That was 2015, wait until they audit the rest of the K decade in power. Their GDP number is going to plummet, poverty skyrocket, etc etc etc.

Surprised the lot of them haven't been put under “protective” custody yet.
10 Marti Llazo (#) Mar 14th, 2016 - 12:46 pm Report abuse
@3 “ ... I don't think there is another default coming up...”

Well, then maybe just higher deficits, hyperinflation, major currency devaluation, recession, growing unemployment, civil disturbances, and another significant nonpayment event.... other than that the economy here is looking just rosy.
11 dsullivanboston (#) Mar 14th, 2016 - 12:58 pm Report abuse
Amazing such an abject failure as Kick is still trying to preserve the lie he was complicit in creating. He should be jailed..
12 ChrisR (#) Mar 14th, 2016 - 05:30 pm Report abuse
Does Kickitoff have ANY credibility with anyone other that the K's, I don't think so.

It was obvious that Bug Eye only dished INDEC so he could write the figures for himself and that worked only with the stupid 15M K's and Peronistas.

As long as the Macri government continues to play by the international 'book' they will be supported financially.

I just wish he was strong enough to knock the stupidity of the Malvinas on the head as well. He could start by removing it and The RCCunts from the constitution.
13 Captain Poppy (#) Mar 14th, 2016 - 07:49 pm Report abuse
Hey D.......don't you miss home? The North End called me all weekend long.....lol
14 dsullivanboston (#) Mar 15th, 2016 - 01:41 am Report abuse
Poppy how are you? Starting to, it was 90s today mid march.. Going to be brutal this summer. Hows things?
15 Captain Poppy (#) Mar 16th, 2016 - 06:58 pm Report abuse
Great enjoying the early spring and Boston is great.

I've spent many years through various years many bases throughout that region......just wait.

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