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BCRP: Annual fiscal deficit in February was 2.4%

BCRP: Annual fiscal deficit in February was 2.4%

The Central Reserve Bank of Peru (BCRP) reported that the annual fiscal deficit continues to decline, going from 8.9% of GDP in February 2021 to 2.4% of GDP. GDP in the second month of the current year. This is mainly due to the growth in current income of the General Government, due to the favorable situation of export prices and the recovery of economic activity, to which is added the extraordinary income from tax debts and control.

In detail, in February of this year, the non-financial public sector registered a deficit of S/ 2,057 million, lower by S/ 1,109 million than in the same month of 2021, as a result of the increase in tax revenues from the National government and the reduction of non-financial expenses of the general government, both current and capital. This was partially attenuated by the lower surplus in the primary result of state companies and the higher interest service on the public debt.

Meanwhile, the current income of the general government increased by 12.4% between February 2021 and 2022. The 11.3% increase in tax income is mainly explained by the higher income tax payments for legal entities and natural personsthe greater collection by the IGV, in particular of the IGV on imports, due to the greater income from ISC and Special Mining Tax. Among non-tax revenues, the higher revenues from royalties and oil and gas canons stood out.

Regarding the non-financial expenses of the General Government, these decreased by 6.0% year-on-year, due to the 11.0% contraction in spending by the National Government. By items, this decrease was recorded in current spending (-3.7%), due to the lower level of transfers, mainly transfers to households within the framework of the strategy to face COVID-19; in spending on gross capital formation (-16.9%), at the three levels of government; and in other capital expenses (-10.8%), due to a lower level of transfers to the Urban Sanitation Program and the Mivivienda Fund due to the Good Payer Bonusmainly.

Evolution of the fiscal deficit. Source: BCRP

In the first two months of 2022, the monetary entity specified that a fiscal surplus of S/ 2,631 million was registered, an amount greater by S/ 1,738 million than the result for the same period in 2021 (S/ 893 million).

The 13.9% increase in current revenues of the General Government, compared to the same period in 2021, reflected the higher tax revenue at 14.5% and non-tax at 11.8%.

On the other hand, the non-financial expenses of the general government decreased by -0.7% versus January-February 2021, as a result of lower spending on gross capital formation (-10.8%) at the three levels of government.

Source: Larepublica

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