Economy

Infographic: Argentina’s soaring fiscal deficit

23rd April 2020

By The Essential Staff

Infographic: Argentina’s soaring fiscal deficit

Mauricio Macri’s administration had made fiscal austerity one of its priorities and Alberto Fernández campaign promised a less strict approach on that front. But while higher spending was to be expected, no one predicted the skyrocketing deficit that the country is seeing since the beginning of the coronavirus lockdown.

</p> <img class="wp-image-9316 aligncenter" src="https://gettheessential.com/wp-content/uploads/2020/04/graph.jpg" alt="Argentina's deficit jumped since Fernández took office, and the trend is starting to accelerate after the lockdown" width="710" height="558" srcset="https://gettheessential.com/wp-content/uploads/2020/04/graph.jpg 2500w, https://gettheessential.com/wp-content/uploads/2020/04/graph-300x236.jpg 300w, https://gettheessential.com/wp-content/uploads/2020/04/graph-1024x804.jpg 1024w, https://gettheessential.com/wp-content/uploads/2020/04/graph-768x603.jpg 768w, https://gettheessential.com/wp-content/uploads/2020/04/graph-1536x1207.jpg 1536w, https://gettheessential.com/wp-content/uploads/2020/04/graph-2048x1609.jpg 2048w, https://gettheessential.com/wp-content/uploads/2020/04/graph-600x471.jpg 600w" sizes="(max-width: 710px) 100vw, 710px" /> <p>The <a href="https://www.eleconomista.com.ar/2020-04-cantado-volo-70-el-gasto-y-el-rojo-se-disparo-8567/">figures from</a> March are staggering. In a month in which only half the days were affected by the lockdown, income merely rose by 31 percent on the year-to-year comparison (with inflation near 50 percent on the same period), while spending soared 70 percent, according to the latest Economy Ministry data published this week. That gap should get even bigger in April, when the lockdown lasted the full month and economic help from the state began to <a href="https://gettheessential.com/economy/2020/04/02/argentina-labor-market-unemployment-five-million-coronavirus-lockdown">step</a> <a href="https://gettheessential.com/economy/2020/04/16/companies-fight-for-survival-as-pandemic-ravages-income">up</a>.</p> <p>The chart also shows that the trend towards deficit pre-dated the pandemic, as spending started to outpace income after January, the first full month of Alberto Fernández&#8217;s administration. Macri&#8217;s government did have a deficit when total spending (including debt payments, which jumped significantly during his term) is factored in, but was quite hawkish about the primary deficit, particularly since Nicolás Dujovne replaced Alfonso Prat-Gay at the Economy Ministry.</p> <p>With the country having completely exhausted the possibility of raising debt abroad and recession likely to keep strongly hitting at tax collection, money printing will likely be the main recourse for the government over the next few months. This has been one of the reasons behind the recent <a href="https://gettheessential.com/economy/2020/04/16/graphic-flight-from-peso-accelerates-in-free-fx-markets">fall of the Argentine peso</a> in free currency markets, and could also lead to renewed inflation once the worst part of the contraction is over.</p> <p>

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The Essential Staff

The Essential is a premium subscription-based news platform that brings you high quality journalism and in-depth coverage in English about the changing face of Argentina’s politics and economy.