IMF Maintains Fiscal Target of 1.4% of GDP for 2026 Despite Revenue Decline

The International Monetary Fund (IMF) and the Argentine government have decided to maintain the primary fiscal surplus target equivalent to 1.4% of GDP for 2026, despite the evident tax collection problems throughout this year that forced deeper spending cuts.

"The fiscal anchor will continue to be a central element of the program, consistent with the goal of achieving a primary surplus of 1.4% of GDP in 2026 and a similar fiscal effort in 2027, as reflected in the 2027 budget presented to Congress," says the statement issued this Tuesday afternoon.

The IMF also indicates that "this would be the fourth consecutive year with a primary fiscal surplus and global fiscal balance." "The continuity of spending discipline and reforms of the tax and fiscal frameworks will further strengthen consolidation efforts, and will also allow for the protection of priority spending in social and infrastructure matters," the agency's statement notes.

The text does not mention the situation of the fiscal targets for June, which were slightly below the proposed result from the second review. At that time, the targets were reduced given the outlook that the economy was growing well below the pace originally outlined in the agreement.

According to the Staff Report of the second review, in what it calls "performance criteria" where the floor for the federal government's primary balance is established, the June target was reduced from $8.45 trillion to $6.86 trillion. This represented a decrease of $1.6 trillion. However, the accumulated amount achieved up to that point was about $6.29 trillion. In other words, it was not achieved.

Change of Discourse

The IMF and Argentina have already changed their discourse several times. During the first year of the agreement, Javier Milei's government had no problems achieving the targets thanks to drastic measures. But there was an explicit refusal up to that point to meet the targets for accumulating reserves of the BCRA. No dollars were purchased to avoid issuing pesos that would not have demand. All efforts were focused on inflation. The dollarization of portfolios that occurred last year due to the legislative elections has now changed the criteria. The government now prefers to have a "bazooka" of dollars ready and has already purchased $15 billion.

While last year the emphasis was on fiscal results, now the agency's statements highlight achievements in terms of reserves.

Budget Targets

The strange thing is that the IMF's statement maintains the annual target of 1.4% of GDP equivalent to $16.2 trillion, while the government in the 2027 budget project estimates that the surplus for 2026 will be 1.3% of GDP for a total of $15.5 trillion.

According to INDEC, the size of the GDP measured in pesos in 2025 was $850.23 trillion. Estimates from the consulting firm Politikon Chaco indicate that updated for inflation and a growth rate of 2.1%, it would lead to the GDP ending at $1,145 trillion in an optimistic calculation. For Alejandro Pegoraro, director of the consulting firm, it could be closer to $1,000 trillion due to the slowdown in activity.

In such large figures, differences of 1 point can make the difference between achieving a target or not. In a smaller GDP, the $15.5 trillion in the budget could represent 1.4% and not 1.3%.

In that sense, Pegoraro indicated to Ámbito that the government could reach the target of $16.2 trillion if it deepens spending cuts in the last quarter. Last year, the national government's fiscal deficit in December was $2.8 trillion, which was mainly due to "a very strong drop in revenues of 7 points," he explained.

The drop in revenues in December 2025 was mainly due to advance withholdings from the agricultural sector to take advantage of a temporary reduction in rates. As this year the conditions are similar, it would be possible for the government to achieve the target if it halved the deficit in the last month when bonuses are paid, and perhaps by postponing payments to January 2027.

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