Nicolas Perez - Oficina de Presupuesto del Congreso

FISCAL IMPACT OF THE BILL FOR A SPECIAL PENSION SCHEME FOR NATIONAL DANCE COMPANIES

by Nicolas Perez | Jun 18, 2021 | Cost Estimates

Bill S-0098/2020 proposes a special pension scheme for the personnel of dance companies under the scope of the Ministry of Culture of the Nation, similar to that of the companies at the provincial level and of the Government of the Autonomous City of Buenos Aires.

At present, the artistic personnel of national dance companies retire under the general regime of Law No. 24,241. When a dancer suffers an injury that disqualifies him/her from practicing his/her profession, he/she does not have pension coverage and must wait until he/she reaches the age required by the general system, in addition to having the minimum number of years of service required by the system.

The special pension scheme of the Bill establishes a minimum age of 40 years and 20 years of service to request an ordinary pension. In addition, it provides for a calculation of the pension benefit different from that of the general system and an increase in the rates of employee and employer contributions, with respect to those in force.

Based on the information available and under certain assumptions, the financial impact on the 2022 Budget would be an increase of AR$6.1 million in revenues and AR$26.3 million in expenditures. There is no information available on the number of beneficiaries and on the expenditure under the current pension system, which would be increased by the beneficiaries who may request the conversion to the new regime.

PUBLIC DEBT OPERATIONS – MAY 2021

by Nicolas Perez | Jun 11, 2021 | Public Debt Operations

At the end of May, the scheduled maturities with the Paris Club totaling approximately USD2.43 billion, the final payment of the 2014 restructuring agreement, were not paid. If the failure to pay persists after 60 days, the country would be declared in default with the member countries of the group.
Three auctions were held resulting in the placement of different instruments for a total of AR$373.17 billion: securities in domestic currency for AR$334.27 billion and bonds in dollars payable in pesos (USD linked) for AR$38.9 billion.
The BCRA (Central Bank of the Argentine Republic) decided that as from June, financial entities may allocate part of their reserve requirements to government securities in pesos with a term of between 180 and 450 days acquired in the primary market. The securities used for reserve requirements will be excluded from the regulatory limits of exposure to the public sector.

Maturities for June are estimated to total the equivalent of USD5.71 billion. Excluding holdings within the public sector, maturities are reduced to USD2.59 billion, of which 92% is payable in domestic currency.

ANALYSIS OF NATIONAL GOVERNMENT BUDGET EXECUTION – MAY 2021

by Nicolas Perez | Jun 10, 2021 | Budget Execution

The increase in total resources (net of Central Bank profits) and a decrease in expenditures led the National Government to record another decrease in the primary deficit in May, which reached AR$ 72.8 billion, an improvement in real terms of 81.2% with respect to the imbalance recorded in the same month of last year.

Excluding transfers from the Central Bank to the Treasury, total revenues expanded by 41.5% year-on-year (YoY) during May, mainly because of the growth in tax revenues, to which was added AR$ 58.24 billion from the Solidarity Contribution in the context of the pandemic.
Primary expenditure declined because of the drop in pensions (10.0% YoY) and public sector salaries (7.9% YoY), but also because the funds allocated to mitigate the effects of the health crisis were lower in the year-on-year comparison with May 2020.
Total expenditure, including debt interest payments, contracted 15.8% YoY.
Expenditures on social programs was reduced by 41.5%, basically because of the discontinuation of the IFE and the AETP. However, other social assistance programs were strengthened and, in some cases, increased by more than 70%.
There was a real increase of 36.3% in capital expenditures for the month of May (AR$ 58.69 billion), with increases in all components, but mainly in the funds allocated to the Pro.Cre.Ar. housing plan.
Expenditures related to the COVID-19 pandemic totaled AR$125.43 billion at the end of May. The funds allocated for this purpose increased by 308.9% since the budget began to be executed, partly because of higher exceptional revenues.

ANALYSIS OF NATIONAL TAX REVENUE – MAY 2021

by Nicolas Perez | Jun 8, 2021 | Tax Revenue

Partially because of the low basis of comparison, national tax revenue increased 72.7% in nominal terms and 14.3% in real terms as compared to the same month of the previous year.

National Government revenues totaled AR$ 862.48 billion, which was the ninth consecutive month of increase (adjusted for inflation).

This behavior is partly explained by last year’s poor fiscal performance, when the mandatory isolation due to the health crisis was still in force, which lowers the basis for comparison.

The 39% nominal increase in the exchange rate also had an influence, which relatively improved the revenues from Export Duties and from the customs component of VAT, as well as from Income Tax. In addition, regulatory changes boosted the collection of shared taxes.

For taxes related to foreign trade, May 2020 also implied a low baseline, since the settlement of many transactions had been advanced to the end of 2019. An improvement in the international prices of exported goods also had an impact on the tax revenue increase.

In absolute terms, the taxes that most contributed to the increase in revenue were VAT (accounting for 30% of the increase), Income Tax (20.2%), Export Duties (18.3%) and Social Security contributions (19.6%), which rose for the second time in eight months.

The PAIS Tax collected AR$ 5.49 billion in May, which represents a nominal reduction of 53.8%, because of the greater restrictions on the purchase of foreign currency.

ANALYSIS OF NATIONAL GOVERNMENT BUDGET EXECUTION – APRIL 2021

by Nicolas Perez | May 13, 2021 | Budget Execution

Because of the increase in resources and the decrease in expenditures, in April the primary and financial deficits fell by 85.2% and 77.4%, respectively, compared to the negative figures for the same month of last year. The economic result was positive by AR$15.97 billion.

These figures do not include the exceptional transfer of profits of AR$230 billion made by the Central Bank to the Treasury in April last year.

Tax revenue and Social Security resources grew significantly, by 44.9% and 14.2% year on year (YoY) in real terms, respectively. In both cases, the low comparison base resulting from the Mandatory Preventive Social Isolation (ASPO), which came into effect on March 20, 2020, had an impact.
Expenditures related to the COVID-19 pandemic were lower than those of last year and this influenced a drop in primary spending. In this item, social benefits and transfers to provinces fell by 26.8% YoY and 64.9% YoY, respectively.
Expenditures on personnel and pensions decreased at rates of 12.9% YoY and 13.4% YoY, respectively.
In the first four-month period, 97.4% of the budget allocated to REPRO II, prior to the last budget expansion provided for by Administrative Decision 460/2021 at the beginning of May, has already been executed.
In April, the implementation of social programs reached 41.1% of the appropriation allocated for the year, above the general average of 28.1%.
During the first four months of the year, the initial approved budget increased by AR$47.9 billion. Among the items that had the largest increases in relation to their initial appropriation were the purchase of vaccines against COVID-19 and logistics and distribution services (AR$29.2 billion), and the REPRO II Program (AR$22.2 billion).

PUBLIC DEBT OPERATIONS – APRIL 2021

by Nicolas Perez | May 12, 2021 | Public Debt Operations

In April, the Treasury placed government securities for a total of AR$266.6 billion through three auctions, including the placement of TY22P, which is particularly attractive for banks because of its regulatory treatment.
The Treasury received net financing for AR$55 billion in Temporary Advances. The stock of Temporary Advances reached AR$1.45 trillion, against a legal ceiling of AR$1.69 trillion at the end of March.
The final payments of the debt renegotiated in 2014 with the Paris Club for a total of approximately USD2.42 billion including principal and interest, are due on May 30. An interest payment on the Stand-By loan with the IMF for an amount equivalent to USD300 million is also due in May.