Argentina posted a primary fiscal deficit worth 3.9% of GDP in 2017, below its 4.2% goal and the 4.6% figure posted in 2016, Treasury Minister Nicolas Dujovne told reporters. He said the government’s 2018 target for a primary fiscal deficit remained at 3.2% of GDP, with targets of deficits worth 0.6% in the first quarter, 1.6% in the second quarter and 2.2% in the third quarter.
Since taking office in December 2015, business-friendly President Mauricio Macri has sought to reduce the wide fiscal deficit he inherited from former populist President Cristina Fernandez, whose two terms in office were marked by increases in subsidies and social spending.
“At the beginning of the year many analysts thought we were not going to meet our goal, but working carefully we were able to do it,” Dujovne said.
Spending rose 21.8% in 2017, below the 24.8% inflation rate. The administration’s has slashed spending on subsidies for utilities and transportation, helping lower the deficit but contributing to inflation, which ended the year well above the central bank’s target for 12-17%. Government revenue rose 22.6%, as an economic expansion boosted tax revenue.
Argentina’s 2018 budget bill had changed the estimated 2017 primary fiscal deficit, which does not include debt service payments, to 4.0%. In the month of December, Argentina posted a primary deficit of 119.607 billion Argentine pesos (US$6.35 billion), Dujovne said.
The total financial deficit rose 32% to 629.1 billion pesos (US$33.37 billion) for full-year 2017 on the back of a 71% increase in interest payments.