2025/09/16 | Diego Ciongo & Soledad Castagna
Regarding the macroeconomic projections, the bill anticipates optimistic assumptions, such as a GDP growth of 5.0% for 2026 (down from a forecast of 5.4% for 2025) and an inflation rate of 10.1% year-over-year by the end of 2026, compared to the 24.5% expected by the end of this year. More details are in the tables below.
Regarding the fiscal framework, the bill includes a primary fiscal surplus of 1.5% of GDP for 2025 and 2026. Both estimates are below the figures included in the first review under the extended fund facility with the IMF, which projected a primary surplus of 1.6% and 2.2% of GDP, respectively. The fiscal deficit, including interest payments, is projected at 0.3% of GDP for 2025 and 2026.
Fiscal projections. According to the bill, tax revenues are projected to expand by 10.0% YoY in real terms in 2026, driven by income tax, VAT, and taxes on financial transactions (credit and debit), amid an expected strong expansion of the economy. On the other hand, total expenditures are expected to expand by 8.8% YoY in real terms in 2026, driven by social security (pensions and social benefits), payroll, interest payments, and other current transfers.
Our take: The budget bill reaffirms the fiscal framework as the government's main policy anchor, demonstrating a strong commitment to achieving a fiscal surplus. President Milei announced the budget on national television, emphasizing that fiscal balance is a non-negotiable principle. He stated that if expenditure growth exceeds revenue growth, budget items will be adjusted to ensure fiscal balance. Monetary financing from the central bank is not permitted. However, given the government's low representation in both the Lower Chamber and the Senate, getting the budget approved will be challenging. In fact, the last time Argentina had a budget approved by Congress was in 2023 during Alberto Fernandez’s presidency. The 2023 budget was used for 2024 and 2025.