BUENOS AIRES (Reuters) - Argentina’s primary fiscal deficit of 14.7 billion pesos ($729.5 million) in March put the first-quarter primary deficit at just 0.3 percent of gross domestic product (GDP), Treasury Minister Nicolas Dujovne said on Friday, half the government’s target for a deficit of 0.6 percent of GDP for the period.
The government is aiming for a primary fiscal deficit, excluding interest payments on debt, worth 3.2 percent of GDP in 2018, Dujovne said at a press conference.
Including interest payments, the March deficit was 37.9 billion pesos, after such payments surged 37.3 percent compared with the same month last year to 23.2 billion pesos. For the first quarter, the primary fiscal deficit was 31 billion pesos and the total financial deficit was 91.5 billion pesos, according to the government’s presentation.
Dujovne said the government would not change its target for 15 percent inflation in 2018, after data on Thursday showed consumer prices rose 2.3 percent in March, meaning consumer prices have already surged 6.7 percent this year.
“The target is not a projection, it is a goal that guides economic policy,” Dujovne said. “We are convinced that after April, when we will have a high number again, we will see a marked decline in the inflation rate beginning in May.”
The central bank previously said inflation would start to decline after a round of regulated price hikes ends in April. President Mauricio Macri’s administration has reduced subsidies for utilities and transportation as part of its efforts to reduce the fiscal deficit.
Dujovne added that a prolonged drought in Argentina’s main agricultural areas contributed to higher food price inflation in March, pointing to substantial increases in prices for bread, eggs and chicken.
He said the drought would reduce economic output in 2018 by 0.8-1 percentage point, but that GDP would likely still expand by around 3 percent year-over-year, in line with what Treasury Ministry officials have previously said.
Reporting by Buenos Aires newsroom; Writing by Luc Cohen; Editing by Chizu Nomiyama, David Gregorio and Susan Thomas