As expected, Argentina’s treasury ran another primary surplus in June of ARS 791 billion, above the surplus of ARS 489 billion posted one year earlier. The nominal fiscal balance also posted a surplus of ARS 551 billion, also above the surplus of ARS 238 billion in June 2024. Consequently, the cumulative primary balance reached an estimated surplus of 0.9% of GDP during the first six months of the year, while the cumulative nominal balance stood at 0.4% of GDP surplus.
Real tax revenues decreased in 2Q25, due to a base effect on income taxes resulting from the financial sector's extraordinary revenue last year. Total real revenues decreased by 3.8% YoY in 2Q25 after growing 1.3% in 1Q25. Tax collection fell by 3.1% YoY in real terms in the period after growing by 4.3% in 1Q25.
Primary expenditures decreased in 2Q25. Primary expenditures fell by 0.8% YoY in real terms in the period, after growing 10.8% YoY in 1Q25 due to a base effect. Pension payments were up 12.6% YoY in real terms (+35.6% in 1Q25) amid the significant drop in inflation. On the other hand, energy subsidies fell by 65.5% YoY, compared with a drop of 55.5% in 1Q25, while payrolls decreased by 5.7% YoY (-4.1% in 1Q25). Capital expenditure decreased by 27.6% YoY, after growing 38.0% in 1Q25. On the other hand, transfers to provinces increased by 133.7% YoY, which was affected due to base effects as they were frozen in the same period last year.
Our Take: Our primary budget surplus forecast for this year stands at 1.6% of GDP, in line with the official target. Disciplined management of the fiscal accounts supports our call.