The National Government adjusted public spending for the first time in 2025 during April, reducing it by 6.2% year-on-year.
Unlike its first year in office, thenational government began 2025 with an increase in public spending . However, this had to be corrected in April to avoid alarming international markets. Overall, national government spending fell 6% year-on-year in April, mainly due to the reduction of energy and transportation subsidies and a sharp cut in public employee salaries.
The consulting firm Analytica and the Congressional Budget Office stated that the National Administration's tax collection is growing at a real rate of 2% year-over-year due to the disappearance of the PAIS Tax, which was not shared. The loss of the PAIS Tax meant a 3-point drop in revenue between Social Security and the provinces, so the National Administration should seek to offset this loss until it reaches 5%.
Due to this reduction in revenue, the government was forced to use the chainsaw again to avoid jeopardizing the fiscal anchor it had secured in 2024. According to Analytica, "in April, accrued primary spending decreased by 5.6% year-over-year at constant prices; while in the first four months of the year, it increased by 6.4% compared to the same period in 2024."
The government is reinforcing cuts in subsidies and public works to maintain the fiscal surplus. We're sharing this article by @MarianoBoettner for @infobae , which incorporates data from our report on the sectors that suffered the greatest adjustment. https://t.co/mwmzKumsC0
— Analytica Consultora (@AnalyticaARG) May 12, 2025
The precise increases were: 21% in January, 11% in February, and 4% for March, which seeks to reflect the 30%, 35%, and 39% adjustments for the same months in 2024. The Budget Office indicated that the April cut reached 6.2% and affected personnel spending by 12.7%, mainly due to below-inflation increases in collective bargaining agreements and staff cuts across different types of contracts.
Likewise, energy and transportation subsidies decreased by 72.9% year-on-year in April; and debt interest expenses also fell, in this case by 45%. Consulting firms estimate that the cuts will need to be maintained and deepened in May due to an expected reduction in tax revenue for that month, caused by companies paying the balance of their income tax from the previous period.
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