First modification: Last modification:
In the first quarter of 2024, Argentina achieved a quarterly financial surplus for the first time since 2008. However, the result is accompanied by drastic cuts to state and social spending.
In a television address, and not through a press release as is traditional, the president of Argentina, Javier Milei, gave an account to the country about his economic management in the four months he has been in power.
The financial surplus was at the heart of a 16-minute speech on Monday, April 22 from the Casa Rosada, as it is the first of its kind for a quarter since 2008.
“I want to announce that the national public sector registered a financial surplus in March of more than 275,000 million pesos (315.4 million dollars), achieving, after more than 20 years, a financial surplus of 0.2 of GDP during the first quarter,” the president revealed, describing it as a “historic feat.”
This is the first quarter with a financial surplus since 2008, which he managed to do by turning on his controversial “chainsaw” of expenses that, although it may satisfy the Executive, is difficult for ordinary citizens to digest.
In white money, the financial surplus refers to the primary surplus plus whatever is paid in debt interest. The primary surplus is generated when public sector income is greater than expenses. These are indicators closely followed by the financial market, as they reflect a country's ability to honor its financial commitments.
In the first quarter of the year, the total income of the Argentine public sector was 6.1 billion pesoswhich come from tax collection, export and import duties and social security contributions.
Expenses, meanwhile, were 5.5 billion, which are divided into social security benefits, public salaries and social programs, among others. The subtraction between income and expenses results in a surplus of more than 600,000 million pesos (about 716 million dollars at the official exchange rate).
Read alsoChiaroscuro of Milei's 100 days in Argentina: surplus, salary drop and legislative confrontation
The cut in public spending is here to stay
President Javier Milei boasted that his government is successfully controlling the waste of public spending and warned the population not to expect a way out of the recession “through public spending.”
Milei took office in December promising to implement an economic “shock” plan in a bid to reduce triple-digit inflation and reverse a prolonged economic crisis marked by the steady deterioration of the peso and growing poverty.
As part of the measures that have led to the surplus, the Government eliminated some state subsidies in energy and transportation, closed several ministries, paralyzed infrastructure projects and laid off thousands of state workers.
This methodology to recover the promised balance in public accounts led to strong tensions for the Executive of Javier Milei with the governors of the provinces, many of whom turned to Justice to demand the adjustment measures.
With Reuter, EFE, AP and AFP
#Economy #painful #surplus #Argentina #deficit #expense #spending #cuts