State spending in Argentina falls to lowest level in a decade

State spending fell by 5.1 percentage points of GDP between 2023 and 2025, standing at around 14.5 percent of GDP – the lowest level in the past decade.

According to a new report by free-market think tank Fundación Libertad, the adjustment was concentrated mainly in public works, economic subsidies and discretionary transfers to provinces and universities.

Social benefits (including retirements, allowances and pensions, among others) represented close to 66 percent of total spending in 2025, up from just over 54 percent in 2023, reflecting deep cuts elsewhere in the budget rather than an expansion of spending.

Family allowances and the Universal Child Allowance (AUH) were the only items to show growth, with an increase of 0.22 points of output.

According to the Fundación Libertad, the adjustment during President Javier Milei’s administration of Argentina has focused on budget items not linked to income policies or social benefits.

There was a significant reduction in discretionary transfers to provinces and universities, as well as in public works, concluded the Rosario-based think tank.

Public works leads way

Within the overall cut of 5.1 percentage points of GDP, the largest adjustment was in public works, which fell by 1.24 percent of output, reducing it to a minimum.

Social benefits not related to retirements, pensions, the AUH or family allowances recorded a decline equivalent to 1.12 percent of GDP, said the foundation.

Subsidies, both for energy and transport, were reduced by around one percentage point of output compared with 2023.

Public sector wages accounted for a cut of 0.71 percent of GDP, while transfers to provinces and universities contracted by a similar amount, close to 0.7 percent of GDP, according to Fundación Libertad.

Retirements and pensions accounted for a reduction of just 0.13 percent of GDP, a marginal figure compared with the overall adjustment. However, in real terms they stand at historically low levels and are also below those of previous years as a share of state spending.

Subsidies

Another significant item was economic subsidies, both for energy and transport. Taken together in 2025, these subsidies represented around one percent of GDP. That's below 2024, when they reached 1.4 percent of GDP, and half of the figure recorded in 2023, when they accounted for close to two percent.

Subsidies stood above two percent of GDP for several years and remained consistently above that threshold between 2020 and 2023.

Within the breakdown of subsidies, there was a marked reduction in energy subsidies as a share of GDP, which fell from elevated levels to around 0.6 percent of output in 2025. Transport subsidies have halved over the past two years and currently stand at around 0.3 percent of GDP.

– TIMES/NA