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Primary public spending goes 14 points behind inflation

October 17, 2018 - By Ashley Bratcher

With a year-on-year inflation of 40.5%, the Ministry of Finance informed that in September the primary expenses that do not include interest increased 26.5% in relation to a year ago.

This reduction in real spending – of 14 points – is mainly explained by the drop in social benefits, which represents 55% of total primary expenditure.

In September, $ 138,199 million were paid for social benefits, 24% more than a year ago. But discounting inflation, in real terms, that fall of 16.5 points represents a decrease of 11.7%.

Thus, due to the strong incidence in the total, the reduction of the item that includes retirements, pensions, family allowances and AUH, which covers a total of 17.8 million people, explains more than half of the drop in primary public expenditure in real terms.

This fall of 11.7% was due to the fact that as of September of this year Social Benefits had a rise of only 19.2% in relation to a year ago, plus the payment last month of a reinforcement of $ 1,200 to the beneficiaries of the AUH (Universal Assignment by Son).

Salary payments of the National State totaled $ 31,709 million, an increase of just 15.5% compared to the $ 27,449 million paid in September 2017. It is a decline of 18% in real terms.

Another item with heavy cuts was capital expenditures. They added up to $ 20,599 million, an increase of 18.2% compared to September 2017. It is a decrease in real terms of almost 16%. Here what fell the most was spending on housing (12.1%) and transportation (34.3%).

In contrast, the interest account ($ 33,004 million) increased 66.5%, 26.5 points above inflation due to interest payments in dollars and pesos tied to inflation.

A novelty was the strong increase in September of economic subsidies. They increased by 90.2%, well above inflation, especially due to Energy subsidies that totaled $ 20,638 million, 148.8% more than a year ago, as a result of the rise in the value of the dollar.

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