How Miley earned Argentina's first surplus in 12 years

Positive news emerged from the Argentine economy on Monday, February 19. This is the surplus supervisor It was recorded in January, the first full month of Javier Miley's government.

The surplus amounted to about $589 million, including interest payments on the public debt, as the government announced on Friday night, the 16th of this month, which is the first monthly financial surplus in 12 years.

The authorities used this fact to defend their economic policy.

Economy Minister Luis Caputo cited Miley V Publishing On the tenth: “Zero deficit cannot be negotiated.”. In response, government spokesman Manuel Adorni raised a campaign for Caputo to be president of the nation in 2031.

However, one piece of data will never explain the entire economic scenario, let alone for Argentina.

How did Miley get the surplus money?

The government achieved a financial surplus last January, because it collected more than it spent during that period. In this case, inflation was the driver behind the surplus.

The annual amount reached 254.2% in January – It should be noted that inflation has been on an upward spiral in Argentina since 2022, and at the end of 2023, it was repressed By the then Minister of Economy, Sergio Massa, in his attempt to win the elections.

“The state has reduced costs, because its income, through taxes, has been adjusted for inflation, but its expenditures have remained constant.”Says economist Claudio Zuchovici.

Compared to January 2023, revenues rose 9 times in taxes on exports, 4 times in taxes on imports, and 3 times in consumption taxes.

Miley did not increase any of these taxes. Inflation has done the job for him.

In contrast, the main source of government spending cuts was the stagnation of pensions, according to A Study preview From the consulting company Analytica.

In addition, there were direct cuts to public works and transfers to the provinces.

“Ultimately, what makes the effort is the purchasing power of people's salaries.”says Zochovici.

How sustainable is the fiscal surplus?

Clearly, inflation-driven surpluses are not sustainable in the long run.

“The question is social: how well people can live without a significant loss of purchasing power.”says Zochovici.

There are still no spontaneous mass demonstrations against Miley, but the Peronist opposition is already taking advantage of the situation.

Associated with Peronism, the main trade union federation in Argentina, the General Confederation of Labor (CGT), held Action and general strike Against Miley on January 24, in a record time of 45 days in government, and he already plans to repeat that.

The government needs…

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