Government Must Reduce Primary Spending to Comply with IMF

By: rootdata|2026/08/02 18:57:00

The government must reduce primary spending in 2026 to achieve a primary surplus of 1.4% of GDP, according to a report from the Argentine Institute of Fiscal Analysis (IARAF). Public spending is projected to fall between 2.8% and 3.8% in real terms this year, accumulating three years of adjustment and remaining nearly 30% below the real level of 2023. For the second half of 2026, IARAF outlines two scenarios: in the pessimistic one, tax revenues would fall by 4% in real terms, and in the favorable one, by 3%. In both cases, an adjustment in non-indexed spending will be required. Non-indexed primary spending, which includes salaries, social programs, and subsidies, should be reduced by between 7.4% and 9.5% in real terms, while indexed spending, mainly pensions and retirements, would increase by 1.3% in real terms. An income of 2 billion dollars from privatizations could improve the fiscal result, but would not allow for an increase in spending. Public investment would be affected, with real spending between 75% and 76% lower than in 2023, and transfers to provinces would face cuts close to 94%. The public sector wage bill would close 2026 between 32% and 34% below 2023, and transport subsidies would be reduced by nearly 40%. In contrast, indexed spending would show a slight recovery.

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