BUENOS AIRES (Reuters) – Argentina’s President Javier Milei presented on Monday the government’s proposal for next year’s budget, which he said would guarantee a fiscal balance, a cornerstone of his economic policy, while also hiking funds for healthcare, education and pensions.
“There is no other way but that of fiscal balance,” Milei said in a national address, ahead of a high-stakes legislative election in which Milei’s libertarian party is aiming to secure enough seats to keep Congress from overriding his vetoes.
The key vote comes after a local election in The populous Buenos Aires province dealt a blow to Milei’s party, whose austerity measures have weighed on its popularity.
Milei said the budget proposal would include a “rule of fiscal stability,” which means that if costs exceed expectations the budget should be adjusted to maintain a fiscal balance.
Next year should see Argentina log a fiscal surplus, or, “in the worst case scenario,” a fiscal balance, he added.
The draft budget document showed that the government expects a fiscal surplus of 1.5% of gross domestic product next year and a financial surplus – after debt payments – of 0.3% of GDP.
Latin America’s third-largest economy should post GDP growth of around 5% next year, according to the document, after expanding 5.4% in 2025.
The government also forecasts a trade deficit of $5.751 billion next year, and for the local currency to hit 1,423 pesos per U.S. dollar. Annual inflation is expected to slow to 10.1% by end 2026 from the 24.5% estimated by the end of this year.
HUMAN CAPITAL
Milei said 85% of the proposed budget would be destined for education, healthcare and pensions, including a 17% increase in allocations for healthcare, 8% for education and 5% for pensions, on top of inflation.
“This means that this government’s priority, as we have always said, is human capital,” Milei added.
Milei’s government has dramatically brought down yearly inflation from the triple digits it reached before he came into office.
However, his government’s popularity has been hit ahead of the key elections by a corruption scandal and the fallout of his austerity measures for disabled and pensioners, which have fueled regular protests in the capital, Buenos Aires.
Local elections in Buenos Aires province earlier this month resulted in a solid victory for the opposition Peronists over the ruling party, raising doubts on the minority government’s ability to gain more seats in Congress and secure its agenda.
Milei will send the proposal to Congress later tonight, he said.
(Reporting by Eliana Raszewski and Sarah Morland; Editing by Leila Miller and Saad Sayeed)
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