Nicolas Perez - Oficina de Presupuesto del Congreso

PUBLIC DEBT OPERATIONS – AUGUST 2020

by Nicolas Perez | Sep 11, 2020 | Public Debt Operations

The results of the restructuring of foreign legislation bonds were announced on October 31, by
means of which 99.01% of the outstanding USD66.18 billion of all bonds involved were
swapped. The level of acceptance of the proposal among creditors was sufficient for the
implementation of the Collective Action clauses in most of the eligible bond series, except for
the Par bonds in euros and dollars issued in 2010. New bonds in dollars were issued for
USD63.2 billion and bonds in euros for EUR4.18 billion.

Subsequently, on September 4, the results of the early acceptance for the swap of government
securities in dollars issued under Argentine legislation were announced. In this stage, 98.9% of
the outstanding USD41.71 billion of eligible securities were swapped. New bonds in dollars for
USD41.72 billion and new inflation-adjustable bonds (BONCER) for AR$57.68 billion were
issued.

As a result of both swaps (securities under foreign and Argentine legislation), the debt maturity
burden (including debt within the public sector) was reduced by USD55.5 billion for the term
2020-2024.

In August, security placements and loan disbursements were recorded for the equivalent of
USD4.68 billion, of which AR$237.9 billion (USD3.25 billion) were auctions of marketable
securities in pesos. On the other hand, the equivalent of USD2.65 billion of principal was
cancelled, mainly due to maturities of Treasury bills in pesos. Likewise, interest payments for
the equivalent of USD656 million were cancelled, of which 54% were in foreign currency.
Debt service maturities are estimated for the equivalent of USD3.44 billion in September,
amounting to USD20 billion until the end of the year (approximately USD10.43 million if holdings within the public sector are excluded).

ANALYSIS OF NATIONAL GOVERNMENT BUDGET EXECUTION – AUGUST 2020

by Nicolas Perez | Sep 10, 2020 | Budget Execution

National government’s primary balance for the month of August showed a deficit of AR$161.7 billion because of the decrease in revenues and the increase in expenditures. Including debt interest payments, the financial deficit reached AR$218.6 billion.
Total revenues shrank by 37.9% YoY in real terms, mainly because in August 2019 profits were transferred from the BCRA for AR$127 billion, something that did not occur in August this year. If this transfer to the Treasury is not considered for comparison, the drop in revenues moderates to 12.4% YoY.
Primary expenditures grew by 24.1% YoY, which is the fifth consecutive month of more than double-digit growth in real terms. Expenditures under COVID-19 totaled approximately AR$116.9 billion, without which primary expenditure would have fallen 2.6% YoY.
Total expenditures (which include debt interest payments) showed a real increase of 25.7% YoY.
Outstanding appropriations increased by 56.2% as of August compared to the initial appropriations. Out of that increase, 62.7% was allocated to social benefits pensions, Emergency Family Income (IFE) and Supplementary Wage (AETP). Law 27,561, passed in August, increased the spending budget by AR$ 1.86 trillion.
As of August 31, total expenditures accrued 57.7% of the current budget appropriation, driven by current expenditures. Transfers to universities (66.0%) lead the level of execution achieved, while at the other extreme is real direct investment (33.6%).

ANALYSIS OF NATIONAL TAX REVENUE – AUGUST 2020

by Nicolas Perez | Sep 9, 2020 | Tax Revenue

National tax revenue reached AR$612.14 billion in August, which implied a nominal growth of 33.5% year on year (YoY), but a contraction in real terms of 5.2%. This fall was the most moderate since February.

The slowdown in the decline in tax revenue can be explained by the gradual increase in the level of activity due to the partial relaxation of the restrictions imposed in the context of the COVID-19 pandemic. In addition, balances of Income Tax for Individuals and Wealth Tax,
whose original maturity in June was extended to August, were collected. The first advance payment for the year 2020 of the Income Tax for Individuals and Wealth Tax was also collected. PAIS tax reached a collection record, mainly driven by the purchase of foreign currency for hoarding purposes.

The uneven evolution of taxes throughout the year has generated a change in the composition of tax revenue, with a lower weight of the three most important taxes (VAT, Income Tax and Social Security) and an advance of taxes such as Wealth Tax, Co-participated Internal Revenue and PAIS Tax.

Likewise, it is estimated that the resources allocated to the National Administration fell in the first 8 months of the year by 13.6% YoY in real terms, those of Other Non-Financial Public Sector Entities by 16.8% YoY and those of the provinces by 11.5% YoY.

FISCAL IMPACT OF THE BILL ON ALTERNATE CAPITAL CITIES OF THE ARGENTINE REPUBLIC

by Nicolas Perez | Sep 3, 2020 | Cost Estimates

This report is prepared at the request of the Senate Budget and Finance Committee and refers to the Bill submitted by the National Executive Power to the National Congress on February 11, 2020. The purpose of the Bill is the creation of “Alternative Capitals of the Argentine Republic”.

As stated in the message of referral, this initiative is part of the decentralization and federalization policies undertaken by the National Executive Power and is based on the coordination among the different levels of government as a good public management practice. It is also based on the objective of achieving a harmonious development that provides access to equitable living conditions and promotes a common project for the whole country.

ANALYSIS OF SOCIAL PROTECTION – MONETARY TRANSFERS TO INDIVIDUALS FROM 2008 TO 2019

by Nicolas Perez | Sep 1, 2020 | Monetary transfers to individuals

Over the last decade, monetary transfers to individuals and households were consolidated as an instrument of social policy and grew from 39% to 47% of government spending. Due to pension moratoriums, disability pensions and Universal Child Allowance (AUH), non-contributory and semi-contributory benefits gained relative weight.

Since 2008, transfers grew steadily in terms of GDP and peaked in 2017 at 11.3%. From that year onwards they declined by approximately one percentage point until 2019.
The number of benefits grew from 12.7 to 21.3 million between 2008 and 2019.
The number of households receiving monetary benefits increased from 2.5 million to 6.6 million.
Children under 18 years of age were the main recipients.
In the term 2008-2019, unemployment insurance covered an average of 9% of the unemployed.
Pension moratoriums involve an expenditure of 2.6% of GDP and 3.6 million people have been able to access Social Security benefits through a pension moratorium.
The non-contributory subsystem is the one that provides the largest number of benefits, with a total of 10.1 million in 2019, but with an expenditure of 2.1% of GDP.
The significant economic and social effects related to the current global health crisis may require the restructuring of the Argentine social protection system to guarantee the effective enjoyment of the population’s rights.

ANALYSIS OF NATIONAL GOVERNMENT BUDGET EXECUTION – July 2020

by Nicolas Perez | Aug 13, 2020 | Budget Execution

National government primary deficit amounted to AR$43.4 billion, due to the increase in expenditures and the decrease in revenues, both conditioned by the health crisis. Meanwhile, if interest on the debt is included, the financial deficit widens to AR$74.12 billion.
Primary expenditures for the month increased by 19.2% YoY in real terms, mainly due to the measures adopted by the national government within the framework of the COVID-19 health emergency.
The programs implemented to face the health challenge resulted in an expenditure of approximately AR$96 billion, without which primary expenditure would have fallen by 2.8% in real terms compared to July of the previous year.
Total revenues dropped 8.3% YoY in real terms due to the contraction of all their components, except for property income, which included the transfer of profits from the Central Bank of Argentina (BCRA) for AR$100 billion.
Through thirteen amendments, the initial budget for the year increased by AR$864.29 billion, 66.2% of which was allocated to strengthen social benefits.
The cumulative execution of the existing expenditure budget as of July totaled 65.9%, mainly due to current expenditures. All expenditure components recorded high levels of execution, except for debt interest and capital expenditures.