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a record that has not been broken for five years

At the end of 2019, the current administration assumed the national executive in a context of profound economic crisis. The four-year period governed by the previous administration meant a notable deterioration of all the main social and economic variables of the country.

Likewise, the public sector in particular was in a critical situation, that is, an over-indebted national State, with an insufficient collection level to face the different expenses related to the multiple functions of the State and to plan for the medium / long term. term. Without forgetting, the loss of regulatory capacities by the State in the domestic economy.

The irruption of the coronavirus pandemic considerably aggravated the economic crisis. The measures adopted by the national government with the aim of reducing the speed of contagion greatly affected economic activity, which resulted in lower tax collection.

Monetary issue

In this scenario, given the impossibility of placing debt In the local capital market for a good part of 2020, monetary issuance emerged as the only way to finance the expenses destined to mitigate the consequences of preventive and compulsory social isolation on the economy as a whole.

Given that the restrictions on circulation became more flexible as a result of the decrease in deaths and infections, the productive forces began to gain intensity with positive implications on tax collection, at the same time, that financing via monetary issuance was reduced according to the reactivation of economic activity.

Similarly, the macroeconomic stabilization carried out during the past year made it possible to access the local capital market, which resulted in a lower need for assistance to the national treasury through the Central Bank of the Argentine Republic (BCRA). Consequently, the consolidation of the economic recovery and the work done to clean up public finances by the current national administration allowed the national public sector to have greater financing capacity.

Increase in collection

The tax collection January of this year increased year-on-year in nominal terms by 46.6%, which was the fifth consecutive month in which the growth of tax collection exceeds inflation. As can be seen in the graph, the inter-annual percentage change in real terms prior to the emergence of the coronavirus pandemic it contracted because of the inherited economic crisis.

With the restrictions on circulation to lower the speed of contagion, the tax revenue of the national State was greatly affected, since, in April 2020, the fall in real terms reached 23.4%.

The easing quarantine It implied that the economic activity begins to expand, with its correlation in a higher collection, therefore, in September 2020 there was a growth of 5.2% in real terms of tax resources, consolidating in the following months of October, November and December, with 4.9%, 0.6% and 1.4% respectively.

Finally, the month of January of this year showed an increase of 5.9%, as a consequence of an increase in the price of commodities.

IFE and ATP, two programs with good results

In May 2020, the plans for Assistance to Work and Production (ATP) In the first months, it reached more than 2 million workers from nearly 300,000 private sector companies.

The first payment of the Family Emergency Income (IFE) that it was for an amount of $ 10,000 and that it reached 9 million people. From then on, month by month the level and the interannual variation of spending decreased, reaching the lowest variation in November (40.5% year-on-year).

In December, the increase in primary spending is usually due to seasonality (payment of half a bonus, for example), which is why it closed with a variation of 52.7% year-on-year.

As tax collection and debt placement in the capital market increased, the monetization of the deficit was reduced. In October there was even a return of temporary advances by the Treasury of – $ 95,780 million. Although in December there was assistance from Central Bank of the Argentine Republic (BCRA) for $ 254,982 million. This was the result of the needs for the level of spending that that month implies) said was lower than that made in December 2019. January 2021 began without assistance from the BCRA (like January 2020).

* National University of Avellaneda (Undav)