2026/07/16 | Diego Ciongo & Soledad Castagna
The primary surplus amounted to 0.6% of GDP in the first half of the year, while the nominal fiscal balance, including interest payments, registered a surplus of 0.1% of GDP. Both balances were lower than in the same period of 2025, when the primary and nominal surpluses stood at 0.9% and 0.4% of GDP, respectively.
Real tax revenues remained weak in 2Q26. Total real revenues declined by 5.0% YoY during the quarter, following a 5.1% contraction in 1Q26. Real tax collection fell by 5.2% YoY, an improvement relative to the 8.0% decline recorded in the previous quarter. The weak revenue performance continued to reflect lower proceeds from export duties, VAT, likely associated with still subdued domestic demand.
Primary expenditures rebounded in 2Q26. Real primary spending increased by 0.9% YoY, after contracting 5.1% in 1Q26. Public sector wages declined by 6.1% YoY, compared with an 8.2% drop in the previous quarter, helped by the recent disinflation process. Transfers to provinces remained as the main source of adjustment, falling 51.1% YoY, compared with a 38.4% decline in 1Q26. In contrast, energy subsidies rose by 60.3% YoY in real terms, following an 83.8% increase in 1Q26, partly reflecting base effects. Meanwhile, capital expenditures increased by 1.2% YoY after a 25.9% contraction in the previous quarter, while real pension spending accelerated to 3.7% YoY from 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. The MoF is scheduled to release July fiscal data on August 18.