Budget Dynamics

► Tax ncome has fallen n January but has r sen n February. Inflat on-adjusted ncreases are even h gher because the cumulat ve January-February CPI was 3.27 percent n 2017 whereas t stands at 1.75 percent n 2018.

► VAT and SCT ncreases were strong n January, show ng momentum. Nevertheless, the January-February comb ned pr nt s not conduc ve to the same result. They both fell n nflat on-adjusted terms whereas VAT on mport posted an ncrease.

► VAT and SCT ncreases were strong n January, show ng momentum. Nevertheless, the January-February comb ned pr nt s not conduc ve to the same result. They both fell n nflat on-adjusted terms whereas VAT on mport posted an ncrease. ► Last year, we toyed for a couple of months w th the dea that as (or f) f scal d sc pl ne s restored n 2018, there could be some room for manoeuvre on the monetary pol cy front. Well, there s none now because fund ng s more select ve n the EM un verse, add to th s the rat ng outlook and all that, and nflat on has become st cky. Do publ c f nances get any better?

► Alas, the f rst two months leave a lot to be des red. True, there has been probably a deferral of 2017’s expend tures, and arrears show themselves n the early 2018 f gures.

► As such, tax ncome has r sen by 18.3 percent and non- nterest expend tures by 19.4 percent n the f rst two months. S nce non-tax ncome was low, overall budget revenues went up by 12.8 percent but total budget expend tures by 18.1 percent. ► Although tax revenues can fluctuate due to record ng pract ces, we d dn’t l ke the overall f gure. The ma n message s non- nterest expend tures cont nue to r se. S nce the allocat on of budget expend tures s rather nelast c, they may follow the current path n the com ng months.

► We gather that e ther non-tax revenues should ncrease, or there s a poss b l ty that f scal def c ts may not eas ly revert back to the h stor c average any t me soon.