2026/05/19 | Diego Ciongo & Soledad Castagna
The cumulative primary surplus in the year through April reached 0.5% of GDP, while the overall fiscal balance—including interest payments — registered a surplus of 0.2% of GDP. Both figures are broadly in line with those recorded in the same period of 2025.
Real tax revenues declined in the quarter ended in April. Total real revenues fell by 5.5% YoY in the period, following a 5.1% contraction in 1Q26. Real tax collection declined by 6.4% YoY during the quarter, slightly better than the 8.0% drop observed in the previous quarter. The weak performance continues to reflect the impact of lower export duties, VAT and income tax, likely associated with still‑soft domestic consumption.
Primary expenditures continued to adjust downward. Primary expenditures declined by 3.9% YoY in real terms in the quarter ended in April, from a 5.1% contraction recorded in 1Q26. Public sector payrolls fell by 5.2% YoY (‑8.2% in 1Q26). Transfers to provinces dropped sharply, down 58.9% YoY (‑38.4% in 1Q26). By contrast, energy subsidies increased by 73.0% YoY in real terms, following an 83.8% expansion in 1Q26 affected by a base effect. Moreover, capital expenditure rose by 7.4% YoY, following a 25.9% fall in the previous quarter, while pension spending rose by 2.8% YoY in real terms (+2.2% in 1Q26).
Our Take: Our 2026 primary surplus forecast stands at 1.5% of GDP, in line with the official target outlined in the 2026 Budget. The outlook continues to be underpinned by disciplined fiscal execution, despite ongoing pressures on the revenue side.