“The fiscal anchor is not negotiated”: that was the phrase with which Javier Milei celebrated the publication of the March fiscal data, which showed a primary surplus of $930,000 million and a financial surplus – that is, after interest payments – of $484,000 million.
For the President, achieving a fiscal surplus at this time was not the same as at other times during his administration. It happens that the data coincides with one of its worst moments in the anti-inflationary fight, just after the publication of the March CPI with its impressive 3.4% monthly.
It was, in that sense, a reaffirmation of principles, at a time when economists of various tendencies They advise the president to go slower in his anti-inflationary fight -which tacitly implies a tax relaxation-, in order to help economic growth. Milei flatly rejected the idea that there was a dilemma between the two objectives, and said that he would stick more than ever to his original plan. There was already proof in that sense, with the monetary contraction that the government made in the last Treasury tender.
‘The fiscal anchor is not negotiated,’ wrote Javier Milei in X
However, in the between the lines of the tweet published by Minister Toto Caputo It can be seen that the government is far from a situation of euphoria. While the difficulty of continuing to apply becomes evident “the chainsaw” Regarding public spending, tax revenue has been in real decline for eight consecutive months.
The minister highlighted that during the first quarter there were a real reduction of 5% in spending. But it is a policy that is increasingly difficult to sustain, because once the first major cut has been made on the basis of “inflationary liquefaction” and the reduction in the payroll of public spending, what remains is more rigid downward spending and savings depend on greater “fine tuning.”
Risk of rebound in spending
To make matters worse, the main component of the expense, the payment of retirements and pensionswhich amounts to almost half of the total budget, comes growing due to the inflationary effect itself: In March, the pension fund received a nominal increase of 2.9% -the January CPI-.
This implies that, in the coming months, at least until June, pensions will continue to vary above inflation – and most likely above tax revenues. Given the “delay” with which the indexing adjustment is applied, 3.4% of the March CPI will only be felt in May retirements.
But, in addition, there are critical economists who maintain that the fiscal result would already be in negative territory if the government applied the pending disbursements.and for which there were rulings against it at the judicial level. This is, among others, the case of the university financing law, whose legitimacy was confirmed by a chamber ruling following the government’s appeal. Put simply, catching up on that payment would mean disburse triple the primary surplus obtained in March.
There is, in addition, another situation of old controversy: the expense accrued – that is, actually incurred – but not yet paid. This is what is technically called “floating debt”, and its incidence is not minor.
For reference, the report of the Congressional Budget Officewhich applies the “cash-based” methodology, has already measured a primary deficit deficit of $700,000 million for March. The OPC report does not coincide exactly with that of the Ministry of Finance, because it reveals the central administration and not the entire public sector. In any case, it is usually considered a predictor of the general fiscal trend.
The ARCA box denies the speech
On the other side of the counter, the existing problem in the income of the fiscal coffers is already undeniable, which has experienced eight consecutive months of real year-on-year decline. Caputo preferred not to even mention the figures for the drop in resources – approximately 5% real year-on-year and he limited himself to justifying the situation with the argument that it was not a surprising situation, but rather the result of a tax relief policy.
And, although it is true that there was a reduction in the tax burden in some sectors – for example, in the agricultural export withholdings and in import tariffs – there are economists who affirm that not everything is explained by this lower tax burden. There is also evidence of a cooling of the economy.
An example is the collection of VAT – the tax par excellence linked to commercial and industrial activity – which has been evolving below inflation for several months. That is, data that contradicts the official discourse about an increase in the level of consumption.
The other item that confirms the coldness of the economy is that of income to Anses. Both the personal contributions of employees and employers’ contributions to the social security system evolved below inflation. In total, Anses collection had a real drop of 2.8% in March compared to last year, a trend that is in line with the worsening in employment figures that have been published in the latest Indec censuses.
Now comes the worst?
In any case, what is clear is that the trend is not promising: While expenses are increasingly difficult to cut, income continues to show little traction.
And it is suggestive that, just the day before the publication of this March result, it was announced the downward correction by the staff of the International Monetary Fund.
Now, the goal committed to the organization -at the request of Caputo himself- fell to 1.4% of GDP, from a forecast of 2.2% that had been set in October-. This reduction would not be serious if the GDP forecast were maintained or if it grew. But yes, in addition, it is being corrected the volume of the economy also fellthat means that the cut in the real amount of the fiscal balance will be much greater.
Speaking in silver: the IMF estimated last year’s GDP at US$683 billion. In the original forecast, 2026 should end with a GDP of US$710 billion, and a primary fiscal surplus of US$15.6 billion.
On the other hand, after the recent downward correction, a GDP of US$707 billion is expected, and a fiscal balance of US$9.9 million. In real terms, The reduction proposed by the IMF on the fiscal surplus is 36% with respect to the original perspective. A situation that does not seem to justify Milei’s euphoric message with his classic slogans “Make Argentina Great Again” and VLLC.
