Argentina’s Congress Approves Milei’s 2026 Budget, Projecting Growth

Argentina’s Senate approved the government’s 2026 budget late on Dec. 26, passing the bill 46 to 25 with one abstention and ratifying each chapter of the measure shortly after 9 p.m. The legislation sets total spending at roughly $101.8 to $102 billion, equivalent to about 148 billion Argentine pesos, and projects 5 percent economic growth in 2026 alongside annual inflation of 10.1 percent. The budget forecasts a primary fiscal surplus equal to 1.2 percent of gross domestic product and assumes a December 2026 exchange rate near AR$1,423 to the dollar.

The vote marks the first time lawmakers have approved a full budget since Milei assumed the presidency in late 2023. His administration had used a modified version of the 2023 budget for subsequent years after officials did not file a budget bill for 2024 and Congress did not debate the 2025 proposal. That prolonged reliance on carryover appropriations is now ending, and the 2026 plan will be the baseline for next year’s fiscal policy and public spending.

Passage of the budget was also a political milestone. Milei’s party emerged from October midterm elections as the top caucus in the lower house and his bloc controls 19 seats in the Senate. The 46 to 25 tally indicates the president won substantial backing from senators outside his immediate ranks, signaling an expansion of his legislative leverage despite reported tensions with a key ally, former president Mauricio Macri. Political strategists view the vote as a demonstration that Milei can convert electoral momentum into congressional support for core priorities.

Economically the budget is ambitious. A primary surplus of 1.2 percent of GDP implies sustained restraint on net borrowing and could reduce rollover needs for the sovereign. The administration’s 10.1 percent inflation target is modest by Argentina standards in recent years, and the projected 5 percent growth rate assumes that labour market and regulatory reforms will lift activity next year. The exchange rate assumption of AR$1,423 will be a central testing point for markets and policy makers. If the peso weakens faster than the budget assumes, inflation could prove higher and fiscal outturns could worsen through inflation indexed expenditures and subsidy costs.

Financial markets and investors will focus on early signs of fiscal execution, and on whether Congress will approve additional Milei priorities in coming months. Lawmakers are scheduled to resume debate on labour reform in February, a vote that could materially affect the growth and inflation trade off embedded in the budget. Implementation risks include the administrative capacity to sustain spending cuts or revenue increases, the degree of pass through from any exchange rate moves into inflation, and how external financing needs evolve.

Longer term the budget debate signals a possible shift in Argentine governance away from extended rule by decree and toward negotiated legislating. That transition, if sustained, would be material for Argentina’s fiscal credibility and for investors assessing sovereign risk. For now the immediate question is whether the ambitious numerical projections survive real world shocks and the political bargaining that will shape 2026 policy.