Argentina Beats IMF Fiscal Targets in First Quarter

Argentina beat budget targets set with the International Monetary Fund as government tax collection climbed, Treasury Secretary Jorge Sarghini said.

Argentina had a primary fiscal surplus, or the excess of revenue from expenses excluding interest payments, of at least 1.75 billion pesos ($610 million) in the first quarter, Sarghini told reporters in Buenos Aires.

The better-than-expected result came as tax collection climbed because of Argentina’s currency devaluation last year and because of faster inflation, economists said.

"Tax revenue was strong and that helped the government meet targets with the IMF, but we have to get this in perspective, tax is up because of a plunge in the peso and inflation and that’s not good," said Gaston Amoros, an economist at Jose Luis Espert & Asociados. "Lets see if they are able to meet the target in the second half.”

The government and the IMF in January agreed to a primary surplus target of 2.5 percent of gross domestic product in return for the fund allowing Argentina to defer $6.8 billion due through August. The government needed to post a 1.5 billion pesos fiscal surplus in the first quarter to meet the target.

"In the first quarter we clearly met with the objectives we set for ourselves, in fact we bettered them," Sarghini said.

"This is a result of better taxes collection, reduced spending and a reduction in debt." . Argentina won new aid after almost a year of negotiations. The IMF cut off aid after the country defaulted on $95 billion of bonds in December 2001, causing the economy to contract about 12 percent last year.

Argentina’s tax receipts rose 57 percent in March to 4.8 billion pesos ($1.6 billion) from a year ago as a devaluation of the nation’s currency led retailers to mark up prices. Higher tax collections, which have climbed for 11 straight months, will help the country meet IMF targets, economists said.