MercoPress. South Atlantic News Agency

Argentina’s finances increasingly in the red

Minister Boudou anticipated Argentina will return to the international money market

The Argentine Central Bank helped the Treasury with 3 billion Pesos (approximately 790 million US dollars) during June to cover the gap caused by exceptional outlays because of the mid term elections.

This meant that June closed with a primary surplus (before debt payments) of 908 million Pesos, 66% down from a year ago. If interest payments are included the fiscal deficit balloons to 1.6 billion Pesos compared to a surplus of 1.3 billion in 2008, according to figures released by economy minister Amado Boudu.

Funds transfers to provinces and cities jumped as well as the overall increase for government employees which had a full impact on June’s numbers.

During the first half of 2009, the primary surplus reached 7.2 billion Pesos compared to 20.3 billion a year ago which means that it is equivalent to a third of what it was at the end of June 2008.

Compared to a year ago revenue increased 26% totalling 240 billion pesos while outlays soared 38% to 220 billion pesos.

Minister Boudou anticipated that the government will attempt to reach a “better balance” in its finances by returning to “voluntary money markets” (from which Argentina has been absent since the massive default of 2002 and later sovereign funds restructuring); a more efficient use of public sector resources and accepting the 2.5 billion US dollars which correspond to the latest IMF distribution of resources.

“However let me remind you that this government is very jealous of its domestic market and we are not inclined to “adjustment policies”. As to the IMF resources we still have to decide how to invest them”, said Boudou.

Finance Secretary Juan Carlos Pezoa added that the increased year-to-year outlays can be tracked to the transfers to provincial governments for public works, housing and infrastructure projects. He also mentioned that real direct investment in the first half of this year jumped 103% and said that direct transfers to the private sector (such as transport compensations) plus salary and pension increases were evidence of a pro-active administration.

“The government is combating the global crisis actively by defending domestic production and the jobs of Argentines” underlined Boudou.