Last Sunday, in a speech transmitted to TV stations all over the country, President Javier Milei explained the basics of the 2025 budget bill he aims to pass in Congress. The main takeaway from the proposed budget was the “Unbreakable Fiscal Rule” — the idea that the administration must cover debt interests before allocating further spending.

Current projections show that Argentina’s debt interests will amount to 1.5% of the GDP in 2025, meaning that, as per the new rule, the administration would need to gain a corresponding surplus. Moreover, if the economy continues to contract, the bill would grant the administration higher discretionary power to cut costs to achieve “zero deficit.”

“If the macroeconomic scenario deviates from the presented projection, discretionary spending will be adjusted to ensure financial balance or fiscal savings will be increased,” the bill says.

While many welcome the idea of fiscal discipline, there are concerns surrounding transparency, and the effects of further austerity, while economists have warned of inconsistencies in the budget proposal.

According to Guido Rangugni, vice president of the Argentine Association of Budgets and........

© Buenos Aires Herald