The fiscal deficit decreased from 8.9% of GDP in 2020 to 2.6% in 2021, mainly due to the increase in tax revenues of the national government due to the recovery of economic activity, a favorable international situation and the record of extraordinary income from payments of tax debts for control actions, reported the Central Reserve Bank of Peru (BCRP).
In detail, the increase in current revenues of the general government by 43.3% compared to 2020 and 20.6% compared to 2019. This is mainly due to tax revenues (49.9% and 25.9% compared to 2020 and 2019), and translated into an increase in the general government current revenue to GDP ratio from 17.8% to 21.1% between 2020 and 2021.
Meanwhile, the non-financial expenses of the general government increased by 9.4% between 2020 and 2021 (25.7% between 2019 and 2021), at the three levels of government, mainly spending on gross capital formation, and on goods and services to face the health emergency, partly offset by the lower level of transfers to households.
Given the estimated growth of nominal GDP, the non-financial spending ratio of the general government to GDP decreased from 24.7% to 22.3%.
The BCRP specified that in December 2021, the non-financial public sector registered a deficit of S/ 14,655 million, lower by S/ 5,494 million than that registered in the same month of 2020 (S/ 20,149 million), explained, mainly, by the increase in current income and, to a lesser extent, the decrease in non-financial expenses of the general government.
While current revenues increased by 22.2% and 34.7% compared to December 2020 and 2019, respectively, in particular due to higher tax revenues (44.8% and 44% compared to 2020 and 2019), due to the higher VAT collection, mainly VAT on imports; corporate income tax; and IEM, as well as higher revenues from regularization of income tax and fines, which record the payment of a tax debt of a mining company.
Finally, non-financial expenses decreased by 4.5% between December 2020 and 2021 (increase of 35.3% compared to December 2019), for the third consecutive month, in the areas of current spending and gross capital formation.
Kingston is an accomplished author and journalist, known for his in-depth and engaging writing on sports. He currently works as a writer at 247 News Agency, where he has established himself as a respected voice in the sports industry.
