Public Accounts Report | III Quarter of 2014

How much did the national government deficit grow between 2012 and the third quarter of 2014, and what does the genuine primary deficit show without transfers from the Central Bank of Argentina (BCRA) and the Sustainability Guarantee Fund (FGS)? March 2015 report.

The Quarterly Public Accounts Report is the first publication on current affairs that the Observatory presents on its website. It is freely available to the public.

With this post, we begin a new way of working. We will be publishing regular reports on current events to provide a diverse perspective on economic and social developments.

The Summary Report

The budgetary results for the third quarter of 2014 at the national level continue the downward trend in the Primary Balance that has been observed since 2012. This balance represents the difference between the amount of revenue the State receives and the expenditures made. Interest payments on the debt are not included.

The primary deficit recorded at the end of 2012 was $4.373,60 million. By 2013, that same amount had increased fivefold to $22.479 million, compared to the previous year.

Interest and transfers from the BCRA and the FGS

In order to obtain a more complete reading of the situation regarding the performance that has been recorded in the public sector, two questions must be added:

      1. The first is that the primary deficit represents a smaller part of the total. Without going any further, when interest payments are added, we must subtract about $51.190 billion for 2012 and about $41.998 billion for the following year; which gives a Financial results (i.e., including interest) with a deficit of around $55.563 billion for 2012, and $64.477 billion in 2013.

      1. The second, and perhaps the one that is subject to greater discussion depending on the biases of each analyst, has to do with the composition of the Primary Result. This does not seem to be a minor detail, since the items that are contributing the most to keeping the peso on the positive side of the fiscal balance are the transfers made to the treasury by the Central Bank and the Sustainability Guarantee Fund. Within the report that is available for download, the analysis is deepened by taking not only aggregated annual data, but also the imputed results for the third quarter of 2014 and in relation to its counterpart from the previous year.

    The primary result as a percentage of GDP

    Reading the indicators alone—expressed in absolute values—does not always or necessarily provide a conclusive picture. To refine the interpretation derived from the preceding paragraphs, the following graph presents the composition of the Primary Balance as a percentage of GDP.

    The Argentine state finances most of its operations by obtaining resources from the economic activity of the country's residents. If this is the case, then comparing the state's debt with the revenue generated within the country's borders is a better indicator of its current and future ability to pay.

    The primary deficit recorded at the end of 2012 represented 0,16% of GDP measured at current prices. In 2013, the ratio more than quadrupled, reaching 0,67% of GDP, also measured at current prices.

    Thus, the brief trend observed in absolute values ​​is also replicated for relative values. Likewise, the same observations regarding the overall result and its composition also apply to this analysis.

    The largest genuine primary deficit of the decade

    In the expanded report, one of the most striking observations regarding results arises from considering the year-on-year comparison between the third quarter of 2013 and the third quarter of 2014. Excluding extraordinary income, the primary deficit would be at a level of approximately $95.000 billion.

    This figure represents 3,1% of GDP measured at current prices, which positions it as the largest genuine primary deficit of the decade.

    Many variables influence this outcome. Some are under the partial control of economic and monetary authorities, but others are not.

    The report that is made available breaks down the different factors that influence this result.

    Icons of the four sections of the report: Results, Revenue, Expenses and Outlook
    Las cuatro secciones del informe completo.

    What the full report contains

    The presentation is structured in four sections, easily identifiable by the icons shown in the image.

        1. Results, the year-on-year comparison by quarter is deepened.
        2. Revenue, details the status of transfers via the Central Bank and the Sustainability Guarantee Fund, as well as that of genuine income, through the analysis of the main income from taxes. 
        3. Additional, the application of state resources is explained. In this section, the analysis of the application of expenditure on transfers to the private sector and the different types of capital expenditure that have been made stands out.
        4. perspectives offers a few brief final comments.
      1.  

      Open access, for use and citation

      The report is available freely and without charge, under a Creative Commons license (CC BY-NC-SA 4.0):

      Informe Trimestral de Cuentas Públicas | III Trimestre de 2014. Informes del Observatorio UNR N.º 2 — Serie Informes de Coyuntura N.º 1, marzo de 2015. ISSN 2683-9067 / 2683-9075. Autor: Germán A. Tessmer.