Quarterly Public Accounts Report | Q4 2014
The drafting of budget reports gives us conflicting ideas:
- There is always the expectation of seeing what has changed, in a country that, by default, has accustomed us to changes.
- The consolidated information that the report is based on has a reasonable delay in publication; at the time of writing it, it gives the impression of writing yesterday's news, issues that the public has already understood and processed.
But before continuing, a clarification is necessary, especially for regular readers. From the Observatory we seek that each economic report is self-contained.
That is to say, the analysis offered should show not only the particularities of each quarter in terms of budget, but also provide a brief explanation of the concepts included in it. Under this premise, some concepts will necessarily tend to be repeated throughout the reports.
As the emphasis of economic policies changes, the concepts that head each section of the document will change accordingly.
Notes on what the year left us
In terms of results, the official information available seems to confirm the consolidation of a downward trend in budgetary matters, which has been occurring since 2010 onwards. The year 2014 closed with a primary deficit of $38.562 billion, which were generated almost exclusively in the last quarter (the accumulated deficit of the first three quarters of the previous year amounted to a deficit of only $419 million).
This should not be misinterpreted. The presence of a trend outlined in just five observations (2010-2014) does not imply that it cannot be reversed, nor that the national state does not have the capacity to face its debts.
Considering these figures, one fact that is difficult to explain is the gap that exists between the information that makes up the national budget law and the observed performance. In the budget projected for 2015, the Government set a financial deficit of around $49.624 billion.
However, in the 2014 fiscal year, the same item showed a global deficit of about $109.702 billion. That is, the global deficit projected for the current year is 2.2 times lower than that actually recorded for 2014.
Beyond the speculations that can be made around the budget projection, a concrete fact that requires a more detailed explanation is the abrupt growth of primary deficit recorded in the last quarter.
In this regard, one of the factors that explains this increase is the exhaustion of the BCRA transfer mechanismBy the third quarter of 2014, 82% of the total available by law had already been executed: the amount of profits accumulated by the BCRA the previous year.
El balance of the social security system This is another factor that helps to explain this growth in the deficit. Although the increases in income to the social security system reached their maximum peaks in the months of October and November, these increases were not enough to offset the increase in the deficit in this area, which totaled around $62.496 billion for 2014.
Regarding expenditure, the items that showed the greatest growth in the fourth quarter compared to the entire year are: transfers to the private sector, expenditure on goods and services, expenditure on salaries and automatic transfers to provinces.
However, of the four mentioned, only the transfers in subsidies, became among the sectors with the greatest growth throughout the year.
Regarding the latter, economic subsidies grew by 57,1% throughout 2014, reaching $224.734 million. Of this figure, more than 70% corresponds to subsidies from the energy sector.
In this quarter, two events beyond the government's control led to a 17,3% decrease in transfers to ENARSA: the reduction in the price of diesel and a December that was much less hot than projected, which reduced peaks in electricity consumption.
In the document that we have provided for download, we offer a more detailed explanation of all these issues. We invite you to share it and to read it further.