Argentina and Chile implement fiscal adjustments and budget projections

In Argentina, the government deepened fiscal adjustments in August, implementing a 10.3% year-on-year real reduction in primary spending. This move follows a period of weakening tax revenue, which fell 0.2% in real terms to approximately $20 trillion. The reduction in spending includes significant cuts to social programs, goods and services, and transfers to provinces. Reports from LCG indicate that tax collection for the first eight months of 2026 saw a real cumulative decline of 3.7%, driven largely by drops in consumption-linked taxes such as VAT and bank credits/debits.

In Chile, an expert committee has established key variables for the 2027 budget. The projected trend GDP for 2027 is set at 2.6%, with an average of 2.3% for the 2027-2031 period. Additionally, the long-term copper price has been projected at US$5.37 per pound for a 10-year horizon, a notable increase from the US$4.38 per pound used in the 2026 budget. These figures will serve as the basis for the 2027 Public Sector Budget Law, with the Ministry of Finance aiming to keep public spending expansion between 0% and 1% to reduce the structural fiscal deficit.