Morgan Stanley Bank Supported Milei's Government and Highlighted January's Surplus

After the fiscal surplus for January was announced, the prestigious Wall Street bank Morgan Stanley supported the Government of Javier Milei, downplaying the controversy caused by the cryptocurrency $LIBRA and stating that the order in fiscal accounts constitutes "an asset in negotiations with the IMF".

In a report, the entity emphasized that the positive balance in public accounts was achieved "despite high interest payments" and highlighted that "tax collection driven by economic activity helped fiscal accounts".

In figures, the financial surplus for January reached $600 billion (0.1% of GDP), while the primary surplus was approximately $2.43 trillion (0.3% of GDP).

However, total revenues experienced a 2% drop in real terms due to the decrease in non-tax revenues. Morgan Stanley indicated that "tax collection remained stable in inflation-adjusted terms, driven by contributions to social security, VAT, and income and debit taxes, but impacted by the decline in personal property tax and foreign trade levies".

"The increase in social security contributions and income tax is largely due to base comparison effects, while the real growth of VAT and debit tax suggests an economic recovery", the report added.

Meanwhile, public spending experienced a 13.5% increase in real terms, mainly due to base comparison effects, although a decrease in subsidies was recorded.

In detail, the primary expenditures of the National Public Sector totaled $8.67 trillion in January, representing a year-on-year increase of 109.5%. Social Security benefits amounted to $5.67 trillion (+112.5% year-on-year), reflecting the impact of the mobility formula established by Law 27.609 and the adjustment made by DNU 274/24, which adjusted pension increases according to inflation.

On the other hand, public sector salaries reached $1.34 trillion (+94.1%), in line with the increases agreed upon in collective bargaining.

In this context, Morgan Stanley emphasized: "The fiscal result for January reinforces the evidence of the Government's commitment to fiscal discipline. The balance of public accounts is the central pillar of the stabilization program and an asset in negotiations with the IMF".

The Ministry of Economy, led by Luis "Toto" Caputo, seeks to maintain fiscal balance and, despite the controversy caused by the cryptocurrency $LIBRA, will aim to regain the initiative with fiscal data as a basis to achieve a new agreement that includes additional funds.

Minister Caputo stated that he can't yet confirm the amount, but they are in the final phase of negotiation with the organization.