Argentina's primary deficit soared in April as the economic impact of the coronavirus pandemic forced the government to introduce fiscal stimulus and income slumped.
The country's public sector registered a primary budget deficit, which excludes interest payments, of 228.8 billion pesos (US$ 3.4 billion), a shocking 83 percent increase compared to the deficit of the previous month and much worse than the primary surplus of 498 million pesos registered in the same month a year ago. The data illustrates the extent of the collapse of the economy in April after an abysmal March.
Revenue only increased 14 percent in April from the previous year, with progress eroded by 45 percent inflation. Meanwhile, spending increased 97 percent year-on-year last month due to social spending and government transfers, the Economy Ministry said in a statement.
Argentina's economic data faces additional scrutiny after last week's default on debt interest payments. The government is still negotiating with creditors in a bid to restructure US$65 billion in foreign debt.
President Alberto Fernández's government has said it will balance its budget in the medium term, despite the impact of Covid-19. It is unclear to what extent the deficit will fall, however, given that most of the country remains under lockdown and has been since March 20.
by Patrick Gillespie, Bloomberg