2025/08/18 | Andrés Pérez M., Diego Ciongo & Soledad Castagna
As expected, Argentina’s treasury ran another primary surplus in July of ARS 1,749 billion, above the surplus of ARS 900 billion posted one year earlier. The nominal fiscal balance posted a deficit of ARS 168 billion, also above the deficit of ARS 601 billion in July 2024. Consequently, the cumulative primary balance reached an estimated surplus of 1.1% of GDP during the first seven months of the year, while the cumulative nominal balance stood at a surplus of 0.3% of GDP.
Real tax revenues decreased in the quarter ended in July, due to a base effect on income taxes resulting from the financial sector's extraordinary revenue last year. Total real revenues decreased by 5.1% YoY in the quarter ended in July after falling by 3.8% in 2Q25. Tax collection fell by 5.7% YoY in real terms in the period after falling by 3.1% in 2Q25.
Primary expenditures decreased in the quarter ended in July. Primary expenditures fell by 7.3% YoY in real terms in the period, after falling 0.8% YoY in 2Q25 due to a base effect. Pension payments were up 16.7% YoY in real terms (+12.6% in 2Q25) amid the significant drop in inflation. On the other hand, energy subsidies fell by 50.4% YoY, compared with a drop of 65.5% in 2Q25, while payrolls decreased by 11.7% YoY (-5.7% in 2Q25). Capital expenditure decreased by 41.6% YoY, after decreasing 27.6% in 2Q25. On the other hand, transfers to provinces increased by 3.0% 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. The decline in revenues requires close attention, as it takes place while activity has disappointed in recent months.