April 27, 2017 / 2:09 PM / 5 months ago

UPDATE 3-Argentina beats 1st-qtr fiscal target, sees growth ahead

(Recasts with deficit target data, adds quotes)

By Hugh Bronstein and Maximilian Heath

BUENOS AIRES, April 27 (Reuters) - Argentina’s first-quarter fiscal deficit came in at a lower-than-targeted 0.4 percent of gross domestic product, the government said on Thursday, forecasting strong economic growth despite an austerity push that has weighed on the job market.

The deficit, targeted at 0.6 percent, shrank to 41.34 billion pesos ($2.68 billion) in the first quarter compared with 45.91 billion pesos in the first three months of 2016, Treasury Minister Nicolas Dujovne said at a news conference.

“It’s satisfying to have beaten the target,” Dujovne said. “But this is just the start of a fiscal program in which we want to be responsible and cautious with public spending.”

Since being named minister in December, a year after President Mauricio Macri was sworn in, Dujovne has introduced quarterly deficit targets as a sign of change after eight years of haphazard and inaccurate official data reported under the previous administration.

Macri’s belt-tightening program has included cuts in electricity, gasoline, transportation and home heating gas subsidies. He has also slashed more than 10,000 government jobs while the waves of capital investment he promised to attract to Argentina have been slow to arrive

This has contributed to an anemic job market. With total employment steady at about 11.5 million, the number of those working or actively looking for a job fell by nearly 150,000 to 12.4 million in the fourth quarter.

But the deficit numbers, closely watched by potential investors, show improvement. In March alone, the primary fiscal gap was 18.18 billion pesos ($1.18 billion), down from 30.01 billion pesos in March 2016, Dujovne said. Including debt payments, the deficit was 35.08 billion pesos($2.28 billion).

Despite exiting a recession with two consecutive quarters of modest growth last year, the economy had a rough start to the year in January and February.

Economic activity fell 1.9 percent in February compared with the previous month, the largest month-on-month drop since Macri took office in December 2015.

March gross domestic product data has not yet been published, but Dujovne said the economy expanded during the month.

“The Treasury prepared a preliminary index of economic activity that showed us strong growth in the month of March,” Dujovne said, adding that the ministry was “sure” the economy grew in the first quarter compared with the fourth quarter.

“In the second quarter of this year we are going to see a growth rate that is faster still,” Dujovne said. ($1 = 15.4050 Argentina pesos) (Reporting by Maximilian Heath; writing by Hugh Bronstein; editing by Chizu Nomiyama and Bernadette Baum)

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