The Milei administration successfully achieved a fiscal surplus in July, a defining characteristic of its economic strategy. The primary fiscal surplus in the first seven months of 2026 stood at 0.9% of GDP. Overall budget surplus, which includes debt interest payments, was recorded at 0.1% of GDP. “The fiscal surplus, which contributes to macroeconomic stability, was achieved amid cumulative tax cuts totaling nearly 3% of GDP since the beginning of the administration,” Economy Minister Luis Caputo celebrated on his X account. He noted that the result was attained notwithstanding the month experiencing a significant concentration of debt interest payments due. Government revenue experienced a year-over-year increase of 30.4% in July 2026, while annual inflation for the same month was recorded at 33.8%. This translates to a 2.5% decline, indicating that the administration depended on expenditure reductions to compensate for the deficit.
The sectors most impacted were energy subsidies at 20% and transfers to the provinces at 19%. There were also reductions in more sensitive sectors, including social welfare (8.1%) and retirement benefits and pensions (4.8%). Milei’s challenge in the coming months will be to sustain the result as revenue continues to decline. The research center Instituto Argentino de Análisis Fiscal estimated that total revenue experienced a real year-on-year decline of 4.6% in the first seven months of the year. Tax revenue experienced a decline of 6 percent. IARAF also noted that the government depended on exceptional revenue from privatisations to uphold a balanced budget. Excluding the sale of state-owned enterprises, the cumulative primary surplus thus far in the current year would have decreased by 26.6% relative to the corresponding period in 2025.
If this situation does not improve, the economic team will need to implement more significant spending cuts to ensure compliance with the 1.4% of GDP primary surplus target established with the International Monetary Fund for this year. Road maintenance is being reduced. One measure the government is employing to sustain the surplus has garnered attention: neglecting the maintenance of national highways. Presidential spokesperson Adirán Ravier faced criticism last week for asserting that not all funds from the fuel tax, designated for the maintenance of national highways, were being fully allocated to that purpose. “A portion goes to [road maintenance] while the rest is allocated by the economy ministry as part of achieving fiscal balance,” Ravier confirmed to a media outlet.
On Tuesday, he clarified that “funds are not being misappropriated” and emphasised that the government adheres to the resource allocation outlined in the national budget. Numerous studies indicate that this amount is not being fully utilised. An estimate by the think tank Instituto Argentina Grande calculated that since Milei took office in December 2023, the National Highway Administration (in Spanish, DNV) — the agency responsible for maintaining national highways — should have received approximately AR$1.35 billion from that tax. According to the report, the DNV has expended only AR$676.9 million, which equates to US$452,775, representing just over 50% of the total expenditure.
