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the harsh drop in transfers that aggravates the fight with the Nation

In the midst of the dispute with the governors after the fall of the omnibus law in Congress and with the escalation due to the removal of transportation subsidies, the Pink House deepens its chainsaw plan and makes so much progress on subsidies as on transfers to the provinces. As he told Ambit days ago, Discretionary transfers fell 98% real year-on-year in the first month of the year.

The data comes from a report prepared by the economist Nadin Argañarazwho details that this implies “a virtual disappearance of these funds.”

Thirteen provinces did not receive funds in January

In fact, in 13 of the jurisdictions the money sent was directly zero. “For its part, the accrual of discretionary transfers fell by a real 62% year-on-year, that is, only 40% of what was accrued in January 2023 remained,” the study highlighted.

For its part, the Argentine Institute of Fiscal Analysis (IARAF) highlighted that, in the month of January 2024, the national government sent $2,290,000 million to the consolidated provinces plus CABA in the form of co-participation, complementary laws and compensation.

Ministry of economy building

The Ministry of Economy had warned that, if the omnibus law were to fail, the adjustment would fall largely on the provinces.

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Discounting the inflationary process of the period (monthly inflation of 20% in January), this would translate into a real fall of 11.1%. Regarding the estimate made by IARAF with data as of the 29th of the month, the difference is 1.1 percentage points.

This drop is mainly explained by the poor performance in income tax collection (-38.8% real year-on-year). VAT collection, after the drop in December, grew again in year-on-year terms, with a real year-on-year increase of 15.5% according to the information provided by DNAP.

“Having a perspective of the last 9 years, the amount of total real automatic transfers in January, if the assumed inflation of 20% monthly is confirmed, would be the worst January in the last 9 years,” they noted.

Co-participation: abrupt drop in 2023

Another worrying fact is that, as reported by Politikón Chaco, in 2023 automatic transfers to the provinces suffered a real drop of 4.4%.

In nominal terms, however, the index marked an increase of 120% compared to the end of 2022. The report was prepared based on data from the National Directorate of Provincial Affairs (DNAP) of the Ministry of Economy.

According to the analysis, in December automatic transfers toThe 24 districts amounted to 1 trillion 928,010 million pesos, with an increase of 153.9% and a decline to constant values ​​of 19.4% if the end-to-end inflation estimated at 27% for last month is taken.

The concept of “automatic transfers” includes the Federal Tax Co-Participation Regime, a set of special laws and compensations by the Fiscal Consensus, while among those considered discretionary or non-automatic there are drafts that, unlike the first, are not governed by pre-established distribution criteria.

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