The government could run short on funds in 2025. Halfway through the year, it has slightly overspent the national budget compared to the historical average. If this trend continues, it will have to further adjust spending or expand budget allocations.

According to the Argentine Public Budget Association (ASAP, by its Spanish initials), the level of expenditure execution of this year’s budget, which is the extended 2023 and 2024 budget, is 45% as of June. This is the highest level in the last 10 years for this period.

Argentina’s Senate passed on Thursday bills to increase retirement pensions, the return of a pension moratorium, and the declaration of a situation of emergency for disabled people. President Javier Milei said while the session was ongoing that he would veto all three laws.

For now, the budget remains within planned parameters, although modifications would have to be made if the fiscal package approved by the Senate last week is not vetoed.

The highest spending in 10 years

The average budget execution for the first half of the year has been approximately 40% since 2015 in Argentina. Historically, the second half of the year sees the highest spending levels. This means that by 2025 there would be an over-execution of 5 percentage points. This would be due to the effect of the pension adjustment formula passed in the Senate on Thursday.

For this reason, ASAP estimates that the AR $126 billion (US $99 million) in budget allocations planned for the current fiscal year could fall short. Either the national government slows its spending pace or it will have to add more revenue to sustain the projected surplus of 1.6% of GDP that the government expects.

By administrative decision 3/25, the Chief of Staff approved at the beginning of the year the adjustment of expenses and resources of the budget extended by Decree 1131/2024, renewing/extending the 2023 budget for 2025. However, later on there were several other budget allocations.

According to ASAP, in cumulative terms for the first half of the year, the National Public Administration’s (APN) Financial Result and Primary Earnings were positive.

“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.

Expressed as a percentage of the APN’s total revenue, excluding the Central Bank of Argentina’s profits, it is observed that after the first six months of 2025, the financial result was equivalent to 2.3% of those resources, 1.5 percentage points higher than the 0.8% obtained in the same period of 2024. 

However, comparing this situation with that prevailing in the first six months of 2023, when the deficit represented 34.5% of total revenue, the dimension of the structural change in the national public accounts becomes clear.

Originally published on Ámbito