By Swann Collins, investor, writer and consultant in international affairs – Eurasia Business News. November 16, 2024. Article no 1312.

Argentina has achieved a budget surplus for the ninth consecutive month as of September 2024, marking a significant milestone for the country’s economy. Libertarian President Javier Milei, who campaigned in 2023 on building surpluses, has been able to achieve his aims by enacting abrupt and often draconian austerity measures as soon as he took office in December 2023. Now, after 11 months, he seems he is winning his bet.

Tax Performance: Argentina recorded a primary surplus of approximately 1.7% of GDP and a financial surplus of nearly 0.4% of GDP during the first nine months of 2024. Specifically, in September alone, the primary surplus reached 816,477 million pesos (around $837 million), while the financial surplus was 466,631 million pesos (approximately $478 million) after accounting for interest payments on public debt.

Government Measures: This fiscal success can be attributed to significant spending cuts implemented by the Argentine government, which offset a moderate increase in revenue. The national public sector has maintained strict budgetary discipline throughout the year, with a reported 30% reduction in primary spending in real terms compared to previous years.

Last week, Javier Milei dissolved the Administración Federal de Ingresos Públicos (AFIP), the nation’s largest tax bureau. The presidential spokesperson Manual Adorni announced that a new agency will replace the AFIP, eliminating nearly 3,100 public employees and saving Argentine taxpayers 6.4 billion Argentine pesos (roughly $6.5 million).

Revenue Growth: Total income for September amounted to 9,114,215 million pesos (about $9.35 billion), reflecting a year-on-year increase of 197.3%. However, this growth is tempered by high inflation rates, which have outpaced revenue increases in many areas.

Economic Context: This achievement is particularly notable for Argentina as it represents the first sustained fiscal surplus since 2008, following years of economic challenges characterized by high inflation and currency devaluation. The current administration under President Javier Milei has focused on stabilizing the economy through rigorous fiscal policies and reforms aimed at restoring credibility and reducing reliance on monetary issuance.

Future Outlook: While this fiscal surplus is a positive indicator, maintaining it may pose challenges as certain temporary tax measures are set to expire. The government will need to navigate these complexities while continuing efforts to stabilize the economy and manage public debt effectively. However, the GDP growth forecast for 2025 is good. BBVA Research presents an even more optimistic outlook, estimating a 6% rebound in GDP for 2025, driven by increased investment, exports, and private consumption. They highlight signs of recovery in Q3 2024 as real wages begin to rise.

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Argentina’s annual inflation soared to 211.4% at the end of 2023, the highest in 32 years, according to figures released in January 2024 by the government’s INDEC statistics agency.

Now, thanks to the disruptive policy of Javier Milei, Argentina’s inflation slowed to 2.7% in October, the lowest level in three years in a win for the libertarian government of President Javier Milei who came to power almost a year ago promising to pull Argentina out of a dire economic crisis. When he took office in December 2023, monthly inflation surged to 25%.

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© Copyright 2024 – Eurasia Business News. Article no. 1312.