BUENOS AIRES, June 7 (Reuters) - Argentina’s primary public spending will fall in real terms in the fourth quarter of this year, following the government’s goal of keeping real spending flat year-over-year, a Treasury Ministry official told reporters on Wednesday.
Sebastian Galiani, secretary for economic policy, said real spending so far this year has been slightly above last year’s levels because public spending grew sharply in the fourth quarter of last year as the government invested heavily in public works and stimulus to help exit a “strong recession.”
“In the fourth quarter real inter-annual spending will be negative, not because anything special will be done in the fourth quarter but because spending was very high in the fourth quarter of last year,” Galiani said. “This year’s spending is very regular, last year’s spending was very irregular.”
Since taking office in December 2015, center-right President Mauricio Macri has sought to close the fiscal deficit he inherited from free-spending populist Cristina Fernandez. The Treasury is targeting a fiscal deficit of 4.2 percent of GDP in 2017 and 3.2 percent of GDP next year.
In the year through April, primary spending grew 36 percent in nominal terms, while revenues grew 40 percent. Most of that is explained by high inflation, which totaled 40.9 percent in 2016 and is seen exceeding 21 percent this year.
Primary spending increased 1.8 percent in real terms - taking inflation into account - in the first four months of 2017 compared with the same period last year, J.P Morgan said in a May 29 note.
Galiani added that the government would beat its quarterly fiscal goals for a cumulative fiscal deficit of 2.0 percent of GDP in the second quarter and 3.2 percent in the third quarter. (Reporting by Luc Cohen; editing by Diane Craft)