The Argentine Public Budget Association reported that the government spent more than usual in the first semester.
It is plausible that the government may experience a funding shortfall in 2025. At the midpoint of the fiscal year, there has been a marginal overspend relative to the historical budgetary average. If this trend persists, it will necessitate additional adjustments to spending or an expansion of budget allocations.
As reported by the Argentine Public Budget Association (ASAP, by its Spanish initials), the expenditure execution level for the extended budget covering 2023 and 2024 stands at 45% as of June. This represents the peak level observed in the past decade for this timeframe. On Thursday, Argentina’s Senate approved legislation aimed at enhancing retirement pensions, reinstating a pension moratorium, and declaring a state of emergency for individuals with disabilities. President Javier Milei stated during the session that he would veto all three laws. Currently, the budget adheres to the established parameters; however, adjustments will be necessary should the fiscal package sanctioned by the Senate last week face a veto.
The peak expenditure observed in a decade as since 2015, Argentina’s average budget execution for the first half of the year has hovered around 40%. Historically, the latter half of the year experiences peak spending levels. This indicates that by 2025, there will be an over-execution of 5 percentage points. This outcome can be attributed to the implications of the pension adjustment formula that was approved by the Senate on Thursday.
Consequently, ASAP posits that the AR $126 billion in budget allocations earmarked for the current fiscal year may not meet expectations. Either the national government must decelerate its expenditure growth, or it will need to increase revenue to maintain the anticipated surplus of 1.6% of GDP that is projected by the government. Through an administrative decision dated 3/25, the Chief of Staff sanctioned at the start of the year the modification of expenditures and resources within the budget as extended by Decree 1131/2024, thereby renewing and extending the 2023 budget into 2025. However, subsequently, there were multiple additional budget allocations.
In cumulative terms for the first half of the year, the National Public Administration’s (APN) Financial Result and Primary Earnings exhibited a positive outcome, as reported by ASAP. “If these profits are excluded, the surplus nature of both results remains, but at a lower level: the Financial Result is AR $1.64 trillion and the Primary Result is AR $6.73 trillion,” the report states.
When considering the APN’s total revenue, excluding the profits from the Central Bank of Argentina, it is noted that following the first half of 2025, the financial result represented 2.3% of those resources, reflecting an increase of 1.5 percentage points from the 0.8% achieved during the corresponding period in 2024. However, juxtaposing this scenario with that observed in the initial half of 2023, when the deficit constituted 34.5% of total revenue, the magnitude of the structural alteration in the national public accounts is evident.