Government’s Commitment to FMI and Economic Performance
The Argentine government, led by Javier Milei, has managed to maintain a fiscal surplus despite increased spending due to holiday payments. In June, the primary surplus reached 790,533 million Argentine pesos, while the financial surplus was 551,234 million pesos.
Net interest payments rose to 239,299 million pesos. Over the first half of the year, the primary surplus climbed to 0.9% of the Gross Domestic Product (GDP), and the financial surplus reached 0.4%.
The government pledged to the FMI to close the year with a 1.6% GDP surplus, aligning with the FMI’s target of 1.6%. With this outcome, Argentina has now maintained a fiscal surplus for 17 out of the past 18 months.
Agriculture Saves Revenue
June’s revenues grew above inflation, totaling 11 trillion Argentine pesos. Non-tax revenues increased by 42% compared to the previous month, although slightly below. According to the Institute of Fiscal Analysis (IARAF), total revenues had a real interannual variation of 1.5%, with tax revenues rising by 1.9% and non-tax revenues falling by 3%.
The impulse in June came from export taxes (retentions), as the temporary cut in quotas for major crops ended. The agroexport sector, particularly soybeans (which dropped from a 33% quota to 26%), increased its payments in the final month of the measure’s validity.
As a result, revenues from export taxes surged by 169.7% interannually, rising from just over 400 billion pesos in June 2023 to 1.1 trillion pesos. Import duties also saw an exceptional rise of 140.5%, generating 388.523 billion pesos.
Workforce: The Major Contributor
Although their growth was more moderate than previous ones, with a 57.3% interannual increase, contributions to social security taxes returned as the top-contributing tax, surpassing VAT. Social security contributions provided 3.6 trillion pesos in June.
In contrast, the income tax saw a 1.1% interannual decline, contributing 934,666 million pesos. This shift in tax positions also influences an ongoing dispute between provinces and the nation, as social security contributions are not copartitioned while income tax is.
Personal property taxes, which are subject to provincial distribution, increased by 263.2%, accounting for 457,080 billion pesos in revenue.
The VAT remains a significant contributor, rising by 50% and explaining 2.3 trillion pesos in revenue. Primary expenditures reached 10.7 trillion pesos, an interannual increase of 40.3%, slightly above the inflation rate for the same period.
