As published by the La Nación portal, Paraguay’s central administration showed a deficit of 1.4% of GDP as of April.
The Ministry of Finance made its monthly presentation of the Financial Situation Report (Situfin), which in the first four months of the year showed a deficit of 1.4% of the gross domestic product (GDP), which would be about US$616.4 million.
At the same time, it showed a negative operating result of 0.6% of GDP, about US$273.1 million, and a total expenditure that rose 16%.
According to the presentation of the economic portfolio experts, the negative results were due to a lower tax collection, a fall in the income from social contributions, and higher expenses in health, retirement and pensions, and social programs.
At the same time, the high level of public investment, which represented 0.8% of GDP from January to April, had an influence.
Still, the speakers endorsed that despite this complex scenario in the four months, the central administration is on track to meet the fiscal deficit target of 2.3% of GDP for this year.
It should be mentioned that the convergence plan is to return to the 1.5% recommended by the Fiscal Responsibility Law, which had already risen in the pre-pandemic stage in the face of adverse situations such as the climate factor and then increased during the Covid-19 wave.
A breakdown of the main components of the report shows that the decrease in total revenues was 2.1% compared to the same period of the previous year, always due to the low execution of tax revenues of 29.9%, which was below the average of the last five years of 31.5%.
In this regard, the collections of the Undersecretariat of State for Taxation (SET) amounted to US$854 million, which, although had an increase of 8% compared to the same period of 2022, in the case of the revenues of the National Directorate of Customs (DNA) that generated US$507 million, these decreased 6.0%.
As for the 16% increase in total expenditure, amounting to some G.14.475 billion, they explained that it was due to the 7.4% increase in personal remunerations due to the payment of salaries indexed to the increase in the minimum wage since July of the previous year, mainly covering health, education, and public forces.
In addition to the increase in public debt, the increase in interest rates at a global level is due to the inflationary context.
Regarding public investment, they emphasized that it is oriented to economic recovery, in line with the goal of fiscal convergence, which at the end of April increased by 8.4% and amounted to US$43.2 million, of which US$294.3 million correspond to resources for the Ministry of Public Works and Communications (MOPC).
With information from América Retail