Government debt increases

Official data from Finance Ministry show that compared to the first four months of 2010, for covering expenses the government has taken a debt 12.5 times larger than one year ago, mainly from domestic banks. By the end of April, government expenses were 12% higher, due to high electoral expenses and increase of wages and pensions.

According to these official data, the public investment bill for this trimester was 25% higher than that of 2010, a common phenomenon that occurs each time the country undergoes elections. Government expenses have increased with high rates. The income collected by taxes and other sources not only have not been increased, but on the contrary, have decreased.

Governmental financial data show that income decrease is occurring due to taxes on consume products, a signal that citizens are spending less. Although prices have increased this year with 4%, according to one year before, incomes collected by VAT, which also measures the consume in our economy, have been lower than in 2010.

This happened in a time when VAT paying businesses increased to 17 thousand after government lowered the threshold from 5 million ALL per year to 2 million ALL. Another tax that signals decrease of consume is the excise.

Although the government increased the excise burden for some products, the incomes collected from this tax not only have not increased, but on the contrary, have decreased compared to one year ago. The next months will show if the debt increase in the first four months of he year was an electoral tactics of the government, or their predictions for the budget have been more optimistic than they should; something that would oblige government to endanger the budget again.

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