Nicolas Perez - Oficina de Presupuesto del Congreso

ANALYSIS OF NATIONAL GOVERNMENT BUDGET EXECUTION – YEAR 2023

by Nicolas Perez | Jan 17, 2024 | Budget Execution

During 2023, the National Government reduced its primary deficit by 0.3 p.p. of GDP and its financial deficit by 0.4 p.p. with respect to 2022. Such dynamics was the result of a contraction of primary expenditures (-7.0%) greater than that of resources (-5.9%).

Total resources fell by 5.9% due to lower revenues from Export Duties (-57.0% YoY) and Income Tax (-21.5% YoY), partially offset by higher revenues from PAIS Tax (+118.0% YoY) and VAT (+8.2% YoY).
Tax revenues reached 9.4% of GDP, 1.0 p.p. below 2022.
Non-tax revenues amounted to ARS308.651 billion from the awarding of 5G licenses, which boosted the increase (+61.2% YoY).
The largest declines in primary expenditures were recorded in Pensions (-6.1% YoY), Family allowances (-31.1% YoY), Energy subsidies (-26.5% YoY) and Capital expenditures (-12.9% YoY).
The purchasing power of pensions and family allowances was reduced by an average of 16.3% YoY, due to the application of the benefit adjustments under the “mobility formula”.
There was a lower financial assistance to CAMMESA (-34.8% YoY) and to ENARSA (-2.3% YoY), within the framework of the tariff segmentation policy implemented during 2023 and a lower value of natural gas imports, due to lower quantities and prices.
On the other hand, personnel expenses (+8.5% YoY), current transfers to provinces (+8.1% YoY) and transfers to universities (+6.2% YoY) increased.
Current appropriations increased by 39.3% during the year: transfers to provinces and social programs had increases above this annual average. Seventeen amendments were made, including two by means of Necessity and Urgency Decrees (DNU), which accounted for 83.1% of the increase in expenditure.

ANALYSIS OF NATIONAL GOVERNMENT BUDGET EXECUTION – YEAR 2023

ANALYSIS OF BILL “BASES AND STARTING POINTS FOR THE FREEDOM OF ARGENTINES” – REPORT 7 – TAX MEASURES – SECOND PART

by Nicolas Perez | Jan 17, 2024 | 25-PE-2023_ENG, Cost Estimates

The analysis refers to a set of sections that create a new regime for the regularization of assets, modifies the Wealth Tax and the Internal Taxes on cigarettes.

The proposed regularization, for residents and non-residents, would allow formalizing of assets up to USD100,000 without being taxed and, starting from that base, it provides for a tax to be settled in U.S. dollars.
If the “laundering” is of cash transferred to the Special Account for the Regularization of Assets, the tax will not apply.
The amount collected under the Asset Regularization Regime does not have a specific allocation, so its revenue would be shareable with the provinces.
It creates the Special Income Regime for Wealth Tax, establishing a scheme for the advance payment of five fiscal years.
The tables applicable to the Wealth Tax for assets in Argentina and abroad are unified and the maximum tax rate is reduced by 30%. In the future, a single rate of 0.5% will apply.
With the same stock of taxable assets in 2023, the collection in terms of GDP would drop from 0.68 to 0.19% over the next five fiscal years.
The ad valorem tax rate on cigarettes is increased by 4.29% (from 70% to 73%), and the minimum tax is eliminated.

ANALYSIS OF BILL “BASES AND STARTING POINTS FOR THE FREEDOM OF ARGENTINES” – REPORT 6 – CULTURE (SEC. 564, 584, 587-590, AND 599)

by Nicolas Perez | Jan 17, 2024 | 25-PE-2023_ENG, Cost Estimates

This report analyzes budget amendments planned in agencies related to culture. The report includes the following measures:

Repeal of the Law creating the National Theater Institute and reallocation of its resources. The funds that would no longer be received would be compensated with savings in expenses, thus not implying a net fiscal impact.
Repeal of the Decree-Law creating the National Arts Fund and reallocation of its resources. This could imply a fiscal cost of about 0.0004% of the GDP.
Repeal of Title V of Law 23,351, which created the Special Fund for Community Libraries. The resources that would no longer be received would represent about 0.0006% of the GDP, being impossible to determine the impact on the expenditure side.
Modification in the resources received by the National Institute of Cinema and Audiovisual Arts. The tax resources that the agency would no longer receive from the tax on recorded videograms would represent an amount equivalent to 0.0024% of GDP.
Amendment to the Law of Creation of the National Institute of Music as regards the resources of the Financing Fund, which would be determined by the Secretariat of Culture of the Nation. The measure would not imply a fiscal impact since the specific allocation would remain in force.

ANALYSIS OF BILL “BASES AND STARTING POINTS FOR THE FREEDOM OF ARGENTINES” – REPORT 5 – PRIVATIZATION OF STATE-OWNED ENTERPRISES (SEC. 8 AND 11)

by Nicolas Perez | Jan 17, 2024 | 25-PE-2023_ENG, Cost Estimates

Sections 8 and 11 of the Bill establish that state-owned enterprises are subject to privatization and authorize the Executive Branch to sell its share in those in which the State does not have control, a situation in which the approval of Congress is not required for a potential sale.

During 2023, transfers and contributions to state-owned enterprises totaled ARS2,301.385 billion, equivalent to 1.22% of GDP.
Most of the funds were current transfers and the rest were capital transfers, but these contributions are not directly related to the operating result.
As of October, 134 thousand workers were employed in the companies. Operadora Ferroviaria S.E., YPF S.A., Banco de la Nación Argentina, Correo Oficial de la República Argentina S.A., Aerolíneas Argentinas S.A. and AYSA accounted for almost 77%.
The lack of data on the net worth and market value of each company and of information regarding transfers and contributions in relation to the operating result does not allow estimating the fiscal impact of future actions enabled by the Bill.

JANALYSIS OF BILL “BASES AND STARTING POINTS FOR THE FREEDOM OF ARGENTINES” – REPORT 4 – DEBT CONSOLIDATION (SEC. 221-227)

by Nicolas Perez | Jan 16, 2024 | 25-PE-2023_ENG, Cost Estimates

The Bill provides for the total cancellation of the intra-public sector debt through the transfer to the Treasury of the securities held by National Public Sector (NPS) entities, including the Sustainability Guarantee Fund (FGS), which would be eliminated.

The total stock of securities held by the NPS and FGS entities as of December 31, 2023, amounted to the equivalent of USD41.173 billion, most of them payable in pesos.

After consolidation, the total stock of public debt denominated in dollars would fall to USD327.299 billion.
At year-end 2023, 70.9% of the FGS’s asset portfolio consisted of public debt instruments.
The consolidation of the FGS’s holdings would reduce public debt by the equivalent of USD38.043 billion.
Of the holdings subject to consolidation, 92.4% belong to the FGS.

ANALYSIS OF BILL “BASES AND STARTING POINTS FOR THE FREEDOM OF ARGENTINES” – REPORT 3 – TAX MEASURES – FIRST PART

by Nicolas Perez | Jan 13, 2024 | 25-PE-2023_ENG, Cost Estimates

This report presents the analysis of a first group of the tax measures contained in the Bill “Bases and Starting Point for the Freedom of Argentines”, as well as an estimate of their fiscal cost wherever possible. The report includes:

The Regime on Regularization of Tax, Customs and Social Security Obligations provides greater benefits than those granted by current regulations. The fiscal impact of this Regime is not estimated due to the large number of assumptions that should be made with respect to individual taxpayers’ decisions.
Tax on the Transfer of Real Estate of Individuals and Undivided Estates. The Bill proposes the elimination of this tax, which in the absence of a regulatory change would have meant an estimated revenue of 0.0153% of GDP in 2024.
The increase of Export Duties in force, or their application on non-taxed positions could increase revenues by 0.42% of GDP.
The fiscal transparency regime for consumers, which obliges to differentiate VAT on invoices regardless of the tax category of the purchaser, has no fiscal impact.
The Incentive Regime for Large Investments does not reduce tax revenues because it involves new projects which, if implemented, would generate a tax expenditure due to the promised tax benefits.