In the first half of 2025, the consolidated primary surplus of the provinces fell by 79% in real terms compared to the same period in 2024, while at the national level, the decrease was 28%, with nine jurisdictions ending in the red. A study by the Mediterránea Foundation titled 'Why the provincial surplus fell in 2025' reviewed the key difference between the two levels of government: the evolution of expenditures and stated that 'the increase in spending explains the reduction in the provincial surplus in 2025'. The rise in provincial spending in 2025: after falling 25% in real terms in 2024, provincial expenditures grew by 14% in 2025, partially reversing the previous adjustment. The largest imbalances were in Tierra del Fuego (8% of spending), Chaco (7%), and Buenos Aires (5.4%). Is the deficit explained by more investment? According to the report, 'not necessarily: 7 of the 9 deficit provinces have very low levels of capital spending'. In this context, Mediterránea Foundation points out that 'it is evident that it is necessary to move towards fiscal rules that limit the growth of both national and provincial spending to sustain stability and enable a future tax reform'. The organization considers that 'the pending accounts in terms of competitiveness require intergovernmental fiscal agreements that limit the increase in national and provincial spending to a rate no higher than the observed inflation, for several years, and allocate fiscal surpluses to finance tax reform'. 'If in the coming months provincial spending continues to increase as it did in the first half of 2025, the chances of a tax reform that reduces the weight of the most distorting provincial taxes will quickly decrease,' the analysts conclude.
