• Primary budget gap cut 91%, while 2015 deficit rose to 5.4%
  • New methodology consistent with that used by private analysts

Argentina’s primary budget deficit narrowed 91 percent in January from the year earlier as the new government of President Mauricio Macri cut spending.

The deficit narrowed to 548 million pesos ($36 million) from 5.8 billion pesos, the Finance Ministry said on its website. The shortfall would have been even smaller, but for a change in methodology, with the government excluding transfers from the central bank and the pension fund as part of its income.

The improvement comes after the deficit ballooned 73 percent to 292 billion pesos last year, representing 5.4 percent of gross domestic product. Macri has pledged to reduce the deficit by 1 percentage point this year and bring it to virtually zero by the end of his term in 2019. While January’s results show a significant reduction in spending, it’s too early to call it a trend, said Luciano Cohan, chief economist at Buenos Aires-based Elypsis.

“You’ve got a contraction in spending of nearly 10 percentage points in real terms, but this can be explained by the process of a new government taking control of spending in which payments are delayed because of revisions,” Cohan said by phone. “It seems much of this could revert in the coming months although the first signal they’ve given is of a very strong contraction in spending.”

Fiscal revenue in January rose 29.7 percent, in line with inflation, and spending increased by 22.6 percent. While the government increased outlays on social security 47.4 percent, all other categories rose less than inflation.

The new methodology more than quadrupled the estimate given by the previous government for the January 2015 deficit of 1.46 billion pesos.

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