MercoPress. South Atlantic News Agency

Argentina’s primary surplus plunges in August

Treasury Secretary Juan Carlos Pezoa, “we still have a surplus”

Argentina reported another sharp drop in the fiscal primary surplus for August, while the overall government accounts were once again in the red. Growth in public spending has outpaced growth in tax revenues, eroding the surplus adding to the economic downturn.

The August primary surplus totaled 539.8 million Argentine pesos (140 million US dollars), Treasury Secretary Juan Carlos Pezoa said. That is down more than 85% from the 3.7 billion pesos primary surplus reported in August 2008.

In August revenue reached 19.8 billion Argentine pesos and outlays 19.3 billion. In the first eight months of 2009, revenue totaled 158.7 billion Argentine pesos and spending 150.2 billion pesos.

“There was a drop but what's important is that we still have a [primary] surplus,” Pezoa told reporters. The primary surplus doesn't take into account payments on the government's debts.

The overall accounts, including debt payments, revealed a fiscal deficit of 244.1 million Argentine pesos (64 million USD) in August. Year-to-date, the deficit stands at 2.55 billion Argentine pesos (667 million USD), according to the government's numbers.

Argentina’s struggle to meet the year-end goal of 15.3 billion Argentine pesos for the primary surplus “won’t be easy”, said Maximiliano Castillo, of the ACM research firm in Buenos Aires.

“It's very difficult that they'll reach the number the government has just presented in the budget [for 2010],” Castillo said.

With four months left in the year, the surplus stands at about 8.5 billion pesos (2.2 billion USD), Castillo said. December is a particularly negative month as the government has to pay out an extra month's salary.

In a release the Argentine Treasury said that contrary to other crisis the main purpose of the government has been “to strengthen the domestic market and defend jobs, stimulating and promoting the private sector, ensuring significant social policies, with heavy investment in public works and transferring funds to all provinces and the capital Buenos Aires”.