By Helen Popper
BUENOS AIRES, June 19 (Reuters) - Argentina's fiscal position worsened dramatically in recent months as government spending outpaced tax revenue growth, but the country maintained surpluses in three key economic indicators released on Friday.
Latin America's No. 3 economy has slowed sharply after six years of rapid growth, and the center-left government of President Cristina Fernandez has stepped up state spending ahead of an important June 28 mid-term election.
State-funded stimulus measures are pressuring the government's accounts just as cooling consumer spending and investment send imports tumbling. The trade surplus soared 139 percent in May from a year ago due to the slowdown.
Meanwhile, the primary budget surplus shrank 85 percent in May from a year ago despite record-high tax receipts in the month, the government said, while the current account surplus narrowed by 12 percent in the first quarter year-on-year.
May's primary surplus narrowed to 915 million pesos ($237 million) compared with 6.03 billion pesos in May 2008 . The figure -- which measures government savings before principal and interest payments -- is used to gauge a country's ability to service its debt.
Primary spending in May jumped due to transfers to the provinces and Buenos Aires city, investment in infrastructure and payments of pensions and public employees' salaries, the Economy Ministry said in a statement.
Primary spending rose 33 percent year-on-year to 23.52 billion pesos while primary income rose by 3 percent to 24.43 billion pesos, the government said. It reported a fiscal surplus after debt payments of 669 million pesos in May.
SPENDING
Many analysts say the government will have to rein in spending after the upcoming election as tax revenue grows at a slower rate than during the recent boom years, when it was boosted by soaring grains prices and high inflation.
'After the elections, there should be a more prudent fiscal policy where the rate of spending growth is linked to income,' the Economia & Regiones consulting firm said in a report.
Government tax revenue rose 12.5 percent in May from a year earlier to 27.29 billion pesos, buoyed by inflation, corporate income taxes and export levies.
The figure was a record in peso terms but not in dollars, since the Argentine peso has depreciated significantly in recent months.
Argentina's accounts have suffered from lower global prices for its vital agricultural exports, although values have rebounded from lows late last year. A sharp drought that slashed production of wheat, corn and soybeans this season will continue to limit state earnings from export taxes.
Friday's data showed exports fell 18 percent in May from a year earlier to $5.14 billion, while imports sank 49 percent to $2.66 billion.
Imports fell due to a 39 percent drop in volume and a 16 percent decline in value, the INDEC statistics agency said in a statement.
Purchases of foreign-made intermediate and capital goods as well as fuel all shrank in May, INDEC said.
The accumulated trade surplus in the first five months of 2009 was $8.33 billion, up 63 percent from $5.12 billion in the same period of 2008.
($1 = 3.86 Argentine pesos)
(Additional reporting by Lucas Bergman and Hilary Burke; Editing by Leslie Adler)
((helen.popper@thomsonreuters.com; +54 11 4318-0655; Reuters Messaging: helen.popper.reuters.com@reuters.net))
((For help: Click 'Contact Us' in your desk top, click here or call 1-800-738-8377 for Reuters Products and 1-888-463-3383 for Thomson products; For client training: training.americas@thomsonreuters.com ; +1 646-223-5546))
((For historical Argentine statistical data in Spanish, please see pages through)) Keywords: ARGENTINA ECONOMY/ (Xtra: To see a calendar of Argentine economic indicators please click on or type in ARECI02 on a quote page and press enter. For separate pages detailing Argentine analysts' economic forecasts, click on,, and) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
BUENOS AIRES, June 19 (Reuters) - Argentina's fiscal position worsened dramatically in recent months as government spending outpaced tax revenue growth, but the country maintained surpluses in three key economic indicators released on Friday.
Latin America's No. 3 economy has slowed sharply after six years of rapid growth, and the center-left government of President Cristina Fernandez has stepped up state spending ahead of an important June 28 mid-term election.
State-funded stimulus measures are pressuring the government's accounts just as cooling consumer spending and investment send imports tumbling. The trade surplus soared 139 percent in May from a year ago due to the slowdown.
Meanwhile, the primary budget surplus shrank 85 percent in May from a year ago despite record-high tax receipts in the month, the government said, while the current account surplus narrowed by 12 percent in the first quarter year-on-year.
May's primary surplus narrowed to 915 million pesos ($237 million) compared with 6.03 billion pesos in May 2008 . The figure -- which measures government savings before principal and interest payments -- is used to gauge a country's ability to service its debt.
Primary spending in May jumped due to transfers to the provinces and Buenos Aires city, investment in infrastructure and payments of pensions and public employees' salaries, the Economy Ministry said in a statement.
Primary spending rose 33 percent year-on-year to 23.52 billion pesos while primary income rose by 3 percent to 24.43 billion pesos, the government said. It reported a fiscal surplus after debt payments of 669 million pesos in May.
SPENDING
Many analysts say the government will have to rein in spending after the upcoming election as tax revenue grows at a slower rate than during the recent boom years, when it was boosted by soaring grains prices and high inflation.
'After the elections, there should be a more prudent fiscal policy where the rate of spending growth is linked to income,' the Economia & Regiones consulting firm said in a report.
Government tax revenue rose 12.5 percent in May from a year earlier to 27.29 billion pesos, buoyed by inflation, corporate income taxes and export levies.
The figure was a record in peso terms but not in dollars, since the Argentine peso has depreciated significantly in recent months.
Argentina's accounts have suffered from lower global prices for its vital agricultural exports, although values have rebounded from lows late last year. A sharp drought that slashed production of wheat, corn and soybeans this season will continue to limit state earnings from export taxes.
Friday's data showed exports fell 18 percent in May from a year earlier to $5.14 billion, while imports sank 49 percent to $2.66 billion.
Imports fell due to a 39 percent drop in volume and a 16 percent decline in value, the INDEC statistics agency said in a statement.
Purchases of foreign-made intermediate and capital goods as well as fuel all shrank in May, INDEC said.
The accumulated trade surplus in the first five months of 2009 was $8.33 billion, up 63 percent from $5.12 billion in the same period of 2008.
($1 = 3.86 Argentine pesos)
(Additional reporting by Lucas Bergman and Hilary Burke; Editing by Leslie Adler)
((helen.popper@thomsonreuters.com; +54 11 4318-0655; Reuters Messaging: helen.popper.reuters.com@reuters.net))
((For help: Click 'Contact Us' in your desk top, click here or call 1-800-738-8377 for Reuters Products and 1-888-463-3383 for Thomson products; For client training: training.americas@thomsonreuters.com ; +1 646-223-5546))
((For historical Argentine statistical data in Spanish, please see pages through)) Keywords: ARGENTINA ECONOMY/ (Xtra: To see a calendar of Argentine economic indicators please click on or type in ARECI02 on a quote page and press enter. For separate pages detailing Argentine analysts' economic forecasts, click on,, and) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.