Argentine Public Spending Projected to Drop 14 GDP Points Over Three Years

A report from the Argentine Institute for Fiscal Analysis (Iaraf) estimates that public spending under the administration of Javier Milei will accumulate a total reduction of 14 percentage points of the Gross Domestic Product (GDP) over three years. The study focuses on the accrued primary spending of the National Public Administration (APN), which accounts for approximately 85% of the National Public Sector's expenditures. By August 2026, the APN's primary spending showed a real cumulative decline of 32% compared to the same period in 2023. This reduction began at 19.4% in January and stabilized between 31% and 32% from March onward.

The most significant real decreases occurred in current transfers to provinces, which fell by 86.6%, and capital goods including public works, which dropped by 83.6%. Transfers to other National Public Sector entities, such as public companies and trust funds, decreased by 62.1%. These transfers to public companies and trust funds represented the largest overall contribution to the spending cut, accounting for 23.6% of the total reduction. Other notable declines include energy and transport subsidies at 59.3%, national university transfers at 39.7%, social aid and family allowances at 30.6%, and personnel costs at 28.9%. Pensions and retirements saw the smallest decline at 8.2%.

If current spending levels persist through the end of the year, the Iaraf estimates that the APN's primary spending will end 2026 at 12.4% of GDP. This would represent a 5.4 percentage point drop relative to 2023.