State spending decreased by 5.1 percentage points of GDP from 2023 to 2025, reaching approximately 14.5 percent of GDP – the lowest level observed in the last ten years. A recent report indicates that the adjustment primarily focused on public works, economic subsidies, and discretionary transfers to provinces and universities. In 2025, social benefits—comprising retirements, allowances, and pensions—accounted for nearly 66 percent of total expenditures, an increase from slightly over 54 percent in 2023. This shift indicates significant reductions in other budget areas rather than an increase in overall spending. Family allowances and the Universal Child Allowance were the sole components to exhibit growth, reflecting an increase of 0.22 points in output.
The Fundación Libertad indicates that the adjustments made during President Javier Milei’s administration in Argentina have concentrated on budgetary components that are not associated with income policies or social benefits. The Rosario-based think tank reported a notable decrease in discretionary transfers to provinces and universities, alongside a reduction in public works. Amid the comprehensive reduction of 5.1 percentage points of GDP, the most significant contraction occurred in public works, which decreased by 1.24 percent of output, thereby minimizing its contribution. The foundation reported a decline in social benefits unrelated to retirements, pensions, the AUH, or family allowances, amounting to 1.12 percent of GDP. Subsidies for energy and transport experienced a reduction of approximately one percentage point of output relative to 2023.
Public sector wages represented a reduction of 0.71 percent of GDP, while transfers to provinces and universities experienced a comparable contraction, nearing 0.7 percent of GDP. Retirements and pensions contributed to a decline of merely 0.13 percent of GDP, a negligible amount in relation to the total adjustment. Nevertheless, in real terms, they remain at historically low levels and are also below those of prior years as a proportion of state expenditure. Another significant item was economic subsidies, encompassing both energy and transport sectors. In aggregate, these subsidies accounted for approximately one percent of GDP in 2025. This figure is below that of 2024, when it reached 1.4 percent of GDP, and is half of the amount recorded in 2023, when it accounted for nearly two percent. Subsidies have consistently exceeded two percent of GDP for several years, maintaining this level from 2020 through 2023.
In the analysis of subsidies, a significant decline in energy subsidies relative to GDP was observed, decreasing from previously high levels to approximately 0.6 percent of output by 2025. Transport subsidies have decreased by fifty percent in the last two years and now represent approximately 0.3 percent of GDP.