The Ministry of Economy and Finance has just dropped the bomb with perfume: the consolidated deficit of the public sector (everything included) reached 4.6% of GDP in the twelve months ending in September.
If we remove the accounting trick of ANCAP's oil stock release (two tenths as a gift), the real hole is that 4.6%.
Four tenths worse than the close of 2024. The last quarter is still pending, which is historically the most spendthrift: year-end bonuses, Christmas baskets, year-end projects, and the classic "you have to spend the budgeted amount or they'll cut it next year."
The official narrative is already ready
- "It's the first year of government, it's always tough."
- "We were left with bills from the previous period."
- "The indexation of pensions is untouchable because it's in the Constitution."
- "Still, in the last three years of the five-year period, we're going to converge to 3%."
I know that script by heart. I heard it in 1990, in 2000, in 2005, in 2010, in 2015, in 2020... and here we are again.
Let's break down the numbers without anesthesia
Non-financial public sector revenues (January-September 2025 vs. same period 2024):
+7.4% nominal
+2.5% real (because accumulated inflation was 4.9%).
In other words, we collected a little more in real terms, basically because DGI chases you even to the bathroom.
Expenditures (same period)
- Public sector salaries: +7.1% nominal
- Pensions (retirements and pensions): +8.0% nominal
- Social transfers and subsidies: +8.6% nominal
- Non-personnel expenses (purchases of goods and services, various "ñoquis"): +14.2% nominal
- Central Government investments: +22.5% nominal
- Debt interest payments: +9.9% nominal
Summary
Everything is rising, but current spending and public investment are increasing three times faster than real revenues. On top of that, interest payments are already eating up almost as much as we grew in revenue.
This is the perfect definition of a debt race: you run faster just to stay in the same place.
The most painful part is that a large portion of this festival is shielded by law or by the Constitution.
The famous indexation of pensions to the previous year's Average Wage Index is an infernal machine: even if the country's real productivity is zero or negative, pensions rise no matter what. Result: every year, pension spending grows more than real GDP.
