January 17, 2018 / 7:46 PM / a month ago

UPDATE 1-Argentina fiscal deficit falls to 3.9 percent of GDP in 2017

(Adds quote from Treasury Minister, 2018 goals)

BUENOS AIRES, Jan 17 (Reuters) - Argentina posted a primary fiscal deficit worth 3.9 percent of gross domestic product (GDP) in 2017, below its 4.2 percent goal and the 4.6 percent figure posted in 2016, Treasury Minister Nicolas Dujovne told reporters on Wednesday.

Dujovne said the government’s 2018 target for a primary fiscal deficit remained at 3.2 percent of GDP, with targets of deficits worth 0.6 percent in the first quarter, 1.6 percent in the second quarter and 2.2 percent in the third quarter.

Since taking office in December 2015, business-friendly President Mauricio Macri has sought to reduce the wide fiscal deficit he inherited from former populist President Cristina Fernandez, whose two terms in office were marked by increases in subsidies and social spending.

“At the beginning of the year many analysts thought we were not going to meet our goal, but working carefully we were able to do it,” Dujovne said.

Spending rose 21.8 percent in 2017, below the 24.8 percent inflation rate. The administration’s has slashed spending on subsidies for utilities and transportation, helping lower the deficit but contributing to inflation, which ended the year well above the central bank’s target for 12-17 percent.

Government revenue rose 22.6 percent, as an economic expansion boosted tax revenue.

The South American country’s 2018 budget bill had changed the estimated 2017 primary fiscal deficit, which does not include debt service payments, to 4.0 percent. In the month of December, Argentina posted a primary deficit of 119.607 billion Argentine pesos ($6.35 billion), Dujovne said.

The total financial deficit rose 32 percent to 629.1 billion pesos ($33.37 billion) for full-year 2017 on the back of a 71 percent increase in interest payments. ($1 = 18.8500 Argentine pesos) (Reporting by Luc Cohen and Maximiliano Rizzi; Editing by Susan Thomas and Grant McCool)

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