The province of Buenos Aires will end 2025 with a budget deficit of 0.8% of geographical gross product (GDP)thereby extending the total lack of balance in its public finances to two decades.
The project of Budget 2026 reintroduces a deficit fiscal policy and applies for approval to take on debt $3.7 billionwith which further deficits are to be financed and maturities are to become due.
When presenting the new budget, the government of Axel Kicillof Excluding the pension operation, a deficit of almost $1.6 trillion (0.5% of GDP) is forecast in 2026, while the deficit in 2025 would exceed $2.1 trillion and remain at 0.8% of the product.
This model is not new. In the last twenty years the province has experienced one continued expansion of public spendingwhich led to repeated deficits that led to this greater fiscal pressure, growing reliance on national transfers and historic debt levels.
In 2004, provincial spending was less than 10% of their GDP. Since then, total spending has increased and will exceed 13% by 2023.
Only the reduction of the national government’s discretionary transfers in 2024 -corresponds to a PBG point- forced spending to fall below 12 percent.
In 2024 the 59% of expenses Buenos Aires’ total was assigned to the category staffwith the incorporation of 22,000 new civil servants in just one year.
The subsidies represented the 12% of the costabove the national average (9 percent).
The province’s own revenues did not grow at the same rate as expenditures, thereby entrenching a structural deficit.
Even with one better participation in federal co-determination (up to 10 percentage points more since 2018), the province remains bound to a system that does not recognize your actual contribution or funding needswith a negative gap of -31% between what you contribute and what you receive.
Given the advance of resource extraction in other provinces, Buenos Aires is still a pioneer 32% of national GDP. Produces $32 of $100, but only keeps $22, or 69% of the resources produced.
The Fiscal pressure at the provincial levelmainly through gross income, has increased from 2.7% to 4% of GDP over the last two decades.
With the 38% of the country’s population With residency in the province, the relative economic weight is diluted.
He GDP per capita in 2024 is estimated at $12,700which is $2,300 less than the national average (15% less).
GDP per capita peaked in 2013; since fell by 13%a decline even greater than that of the geographical product.
The province’s public debt is 6% of GDP, a moderate level but higher than the national average (4%).
These debts represent the 58% of total salesThis makes Buenos Aires one of the jurisdictions most at risk current solvency. The province would need more than that half of its annual collections to pay off its entire debt portfolio.
Debt sustainability depends heavily on your ability to repay.
Buenos Aires has suffered from chronic deficits for twenty years and has had no significant economic growth over the same period The health of its public finances is increasingly deteriorating.
Despite this context, the provincial government requested An additional $3,285 million for central administration and $400 million for decentralized organizations.
The public finances of Buenos Aires have the characteristic features of a entrenched fiscal populism: Record tax pressure, increasing current spending, over-sizing of public employment and subsidies as instruments of social containment and a persistent deficit, even in times of higher tax revenues.
In a country where state reform and spending efficiency are debated, Argentina’s largest, most populous and most unequal province cannot afford to continue to incur debt
This is not an immediate crisis, but rather a structural stagnation increasingly visible, which undermines competitiveness and development opportunities.
In a country debating state reform and spending efficiency, Argentina’s largest, most populous and most unequal province cannot afford to continue relying on debt as the only answer to its underlying problems.
The future will require abandoning the inertia of the structural deficit and once and for all face a model change focused on responsibility, development and efficiency.
The author is an economic and financial analyst at Econmetrica and a member of Fundación Apolo