Execution of the 2025 Budget Expenditure Increased, But Fiscal Space Reduced in a High Deficit Year
The fiscal crisis has created major challenges for budget execution. Photo: Image generated with artificial intelligence.
TL;DR
- The 2025 National General Budget (PGN) execution showed recovery amidst a demanding fiscal context.
- Despite faster spending, high deficits and financing restrictions reduced fiscal space and increased pressure on public finances.
- The fiscal balance worsened in 2024 and is projected to remain in deficit in 2025, impacting budget decisions.
- Budget deferrals reduced the PGN's effective amount by $16.2 trillion, mainly from functioning and investment.
- Public investment was disproportionately affected by fiscal adjustments, decreasing by 7.8% from the initial appropriation.
- Overall execution of obligations (excluding debt service) improved in 2025 but remained below the historical average.
- Investment execution closed at 64.2%, significantly below its historical average, indicating substantial carry-over into 2026.
- Sectoral execution varied widely, with Education, Health, and Science leading, while the Presidency and Transport lagged significantly.
- The budget lag, or floating debt, decreased but remains elevated compared to recent years, impacting future execution capacity.
- Increased primary spending execution in a period demanding austerity reduced available fiscal space, potentially pressuring the fiscal result.