The government deepened spending cuts in August and is seeking to shore up its accounts before the elections.

The national government accelerated fiscal adjustments in the run-up to the Buenos Aires elections to keep public accounts under control after a July that closed with a financial deficit due to debt interest payments. According to official data processed by the consulting firm Analytica, spending in August fell 5.5% year-on-year, representing the fastest pace of budget cuts so far in 2025.

The decline contrasts with a cumulative increase of 1.2% so far this year, mainly explained by pension spending, indexed to inflation and the largest item in the budget. The impact of the automatic retirement formula, in effect since April 2024, forced deeper cuts in other areas.

According to the report, pensions grew 6% in real terms in August, while public works plummeted 70% year-on-year, after dragging on cuts from 2024. Economic subsidies (-41%), transfers to provinces (-25%), spending on goods and services (-20%), and public salaries (-8.5%) also fell sharply.

In the year-to-date, pensions show a real increase of 15%, accompanied by the Universal Child Allowance and other indexed programs. In contrast, energy and transportation subsidies have accumulated a 50% drop. Public works have fallen by 51.7% and public salary spending by 9.5%.

The Executive Branch presented a draft of the 2026 Budget to Congress with a new feature: the inclusion of a "fiscal rule" that will allow items to be automatically adjusted based on the level of tax revenue . The goal is to institutionalize fiscal balance and avoid spending increases without genuine financial backing.

The government has already agreed with the International Monetary Fund (IMF) to achieve a financial surplus of 1.6% of GDP by 2025, higher than the initial projection. In the first seven months of the year, public accounts accumulated a primary surplus of 1.1% of GDP and a financial surplus of 0.3%.

The IMF warned that, as the burden of debt interest increases, a greater adjustment will be necessary. A primary surplus of 2.2% of GDP will be required by 2026, and by 2027 the target will rise to 2.5%. This requires strengthening fiscal discipline and advancing structural reforms in taxation, revenue sharing, and the pension system.

In line with these demands, the Casa Rosada is preparing a legislative package to "institutionalize" the zero deficit. This will be done through a new law, replacing the current fiscal responsibility rule . The government thus seeks to send a signal of commitment to macroeconomic stability and guarantee access to international financing after the end of the fiscal restrictions.