Government strengthens the chainsaw to maintain the fiscal surplus

The national government intensified during April the fiscal adjustment on various key budget items to maintain the balance of public accounts. According to the consultancy Analytica, subsidies fell by 70% year-on-year, while public works were reduced by 63% and public sector salaries decreased by 12.8% in real terms.

Primary spending down for the first time in 2025

According to accrued data from the Ministry of Economy, primary spending in April fell by 5.6% compared to the same month last year. This is the first real decline so far in 2025, after three consecutive months of year-on-year increases: 21% in January, 11% in February, and 4% in March.

"The strongest reduction was observed in energy subsidies, which decreased by almost 70% year-on-year", indicated Analytica. This is due to the progressive removal of tariff subsidies, which began last year and will continue throughout 2025. In fact, in the failed national budget project, these items were among the most adjusted.

Less spending on salaries and social programs

The cut was not limited to subsidies. Adjustments were also observed in social programs such as Potenciar Trabajo, Progresar scholarships, and food policies, with a 20.2% drop. Public transportation spending was another affected area, with a reduction of 23.9%, and capital spending contracted by 25%, according to data from the Congressional Budget Office (OPC).

Meanwhile, there were some increases in specific items. Transfers to universities grew by 8.1%, non-contributory pensions by 7.5%, and family allowances by 22%. The pensions and retirements category recorded a 23.3% increase, driven by the mobility formula. Transfers to provinces also stood out, with a rise of 256%, although from a very low base.

The fiscal chainsaw in the first quarter

Taking the accumulated period between January and April, the most significant cuts were concentrated in three areas: subsidies (-59.4%), public works (-52.5%), and public salaries (-10.4%). This was reflected in a report by Analytica, which highlights the adjustment profile in this second year of President Javier Milei's administration.

The primary surplus accumulated in the first four months of the year, according to the OPC, was 5.9 trillion pesos. ASAP (Argentine Association of Budget) estimated a similar result: 5.8 trillion pesos, along with a financial surplus —excluding debt interest— of 3.6 trillion. However, these figures may differ from the official ones, as private reports are based on accrued spending, while the Ministry of Economy uses the cash basis.

The fiscal target with the IMF

The government will seek to achieve a primary surplus of 6 trillion pesos between April and May to meet the first target agreed with the International Monetary Fund. Throughout the year, the official goal is to achieve a greater fiscal adjustment than initially planned: from 1.3% to 1.6% of GDP.

"The chosen path will be through spending," stated a source from the Executive Branch. Although in 2024 the surplus was supported by extraordinary revenues such as the PAIS tax and the tax amnesty of the fiscal package, these resources will not be available this year. The government rules out new exceptional sources and bets on a deeper cut as a strategy to maintain balance.