The “new” 2026 budget bill is shaping up to be just that An essential part of economic policy And from next summer if the government, after its electoral victory and cabinet reshuffle, reaches reasonable agreements with the governors and appropriate interlocutors from the ruling party and the opposition with the aim of promoting long-awaited reforms, such as tax and labor reforms, although pension reform will remain on the waiting list.
With the exception of economists and other public finance specialists, not many people know that the government of Javier Miley, since taking office, has had to deal with the national budget law issued by Alberto Fernández in 2023. This is an unprecedented situation, as it was extended by decree for two consecutive years due to the refusal of the opposition majority in Congress to approve laws in 2024 and 2025..
Thus, although it may seem paradoxical, a large part of the opposition offered the government the alternative use of the “saw, mixer and freezer”. It is a restrictive adjustment as much as it is discretionary in public spending Through Decrees of Necessity and Urgency (DNU) or Administrative Decisions (DA). Unlike the past, they were not used to increase spending, but rather to achieve primary surpluses and fiscal balance.
This turning point was notable if we consider that – according to Yarav – in the 63 years before 2024, at least 57 countries ran primary fiscal deficits, covered by inflation tax (issuance of pesos) and/or debt (internal or external). In general, They were “rubber” budgets, as this column pointed out in July of last year.
After the legislative elections in October, everything indicates that the draft 2026 budget will this time become law. Not only because its discussion in Congress has been postponed until after December 10 (when lawmakers from the ruling party and allied parties will hold more seats), but because special sessions have already been called for its approval after a hardening opinion among lawmakers. but The arduous negotiations with provincial governors were reducedAlthough 18 of them signed the May 2024 Charter, which describes the fiscal balance as “inalienable.”
Specifically, one of the main changes of the project is the “Fiscal Rule” for 2026. Its implementation will mandate the maintenance of a primary surplus (the difference between income and expenditures, without counting the payment of interest on public debt) and a balanced fiscal result in the national public administration (APN), which represents more than 90% of expenditures of the national non-financial public sector (SPNF, without public companies). If expenses exceed expectations or income falls, items must be adjusted to keep the accounts in balance.. Furthermore, expenditure and debt caps may only be modified by law or a DNU approved by Congress, and funding sources must be determined in advance.
Necessary repairs
He described the progress recorded in the past two years in financial matters before Three famous specialists At an explanatory conference organized a month ago by ASAP (Argentine Association of Budget and Public Financial Management). However, too They raised the need to reform or abolish some institutional norms that have been outdated over the decades, and that distort and conspire against more efficient management of public accounts.as will be seen later.
Guido Rangoni (Vice President of ASAP) highlights that APN expenditures fell by almost 6 points of GDP, going from 19.9% in 2023 to 14% in 2024, a level that was maintained in 2025 and in the accounts for 2026. Peak expenditures were 24/25% in 2015/2017 and 25.7% in 2020.
He also noted that this year the 27% decline in real terms achieved in 2024 and the balanced fiscal result (slight surplus) were maintained, despite Not counting capitalizable interest, which, if recorded correctly, would result in a deficit.
This is because the Financial Administration Act (LAF) 1992 provides for the calculation of interest “below the line” on this type of debt instruments (such as Lecap) due to the impossibility of calculating it in advance; but It’s a way to make them invisible. For the case, The Broda study calculates that if capitalized interest is included, the fiscal deficit in September would have been 2.7% of GDP.Although rates – which had risen to 60% – fell at the last tender this month to 36% and maturity periods were significantly extended.
As for Macroeconomic forecasts for 2026he considers them Rangoni Very optimistic Compared to those in the market expectations survey (REM) conducted by the central bank in September. For the case, The official project forecasts a 5% GDP increase (vs. 3% REM), 10% annual inflation (vs. 19.5%), and a December exchange rate of $1,423 (vs. $1,812).
According to the specialist, the higher inflation rate than the calculated rate means – in the absence of expansions – that current and capital expenditures will be 1.9% lower in real terms than those expected in the budget. Of the total $148 billion (14.2% of GDP) with a similar amount of resources, more than half ($84.4 billion) corresponds to Social Security, which is adjusted for inflation (excluding the fixed minimum wage bonus and the movement of family allowances).
next to, The project eliminates spending “caps” in areas such as education, science, technology and defence, although financial shares for the knowledge economy are expanded and automatic transfers are expected through joint participation to the regions. For $73.9 billion, in addition to $3.6 billion for specific programs that Congress must approve when the law is passed.
Controversial DNU
In the ASAP debate, Marcus McCune (former Under Secretary and Senior Director of the Congressional Budget Office between 2018 and 2023) considered it contradictory that the 1994 Constitution created the DNU and prohibited its use for tax, electoral, or political partisan reforms, but not to change the structure of the national budget, which he described as an essential tool of the republican system. For more information, he adds that, with the exception of the period 1994/1996, In the first ten years, more than a hundred DNUs were issued to the budget and that Argentina is the only country in the world where public spending can be increased by decree, Although eliminating it requires constitutional reform.
However, he questioned the recent draft, which was generally approved by opposition representatives, which would automatically repeal the National Unity Law with the rejection of a single chamber (which returned to the Senate for review). His explanation is that an article in the army (37th session) reserves for Congress decisions affecting the total amount of the budget and planned debt, as well as items related to reserved and intelligence expenditures, which were applied in the years 2020 and 2022.
On the other hand, it proposes extending budgets in presidential election years until April of the following year, so that they can be prepared by the administration that takes office in December, and not by the outgoing administration. He asserts that since the budget law is only valid for one year, permanent regulations should be prohibited as permitted by the Permanent Supplemental Budget Law (11172), which dates back to 1930.
More than a year ago, former National Budget Office Undersecretary Alcides Saldivia – who recently died – described this rule as… “A landfill where all the budgetary and non-budgetary malice and distortions punishable by the annual law, which currently contains 180 articles, end up.”. It was also considered a law Private cooperating parties (23.283) as well “A source of large concessions that circumvent budgetary regulations.”.
For his part, Ricardo Gutierrez (former Treasury Secretary) agrees that the permanent supplementary law is “an eyesore with enormous institutional risk,” and stresses that the national budget has long ceased to fulfill the role of the “law of laws” assigned to it by the Constitution.
“Since the 1994 reform, this has become just another law, despite being a fundamental institution of the republic and democracy,” he adds. “In countries like the United States and Italy, there are legal deadlines for budget approval, and if they are not met, the public administration is closed until it is approved. In Argentina, no.”
It also shows that many countries in the region have basic laws to institutionalize public policies, which require special legislative majorities to approve or repeal them, unlike Argentina, where one law can be replaced by another or violated without further processing, as happened with financial agreements. As another illustrative case, he cites a law passed in 1999 (25552) that defines the fiscal balance, how to measure it, the anti-cyclical fund, etc., and although it is in force, it has become Painted cardboard. “If these measures had been institutionalized, the sad default in 2001 could have been avoided,” he added. “To restore market confidence, we must maintain fiscal balance and reduce country risks to 100 basis points,” he concluded.
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