🏛️ Government Spending

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Government Spending 🏛️

No doubt you’ve got nothing on your mind these days besides Latin American fiscal policy, right? Well, today let’s set aside the noise and the rhetoric and actually dive into the local governments which are spending within their means—or not.

For simplicity’s sake, we’re only going to look at the five biggest regional economies: Argentina, Brazil, Chile, Colombia, and Mexico.

The first thing to know is that all of these countries have run a fiscal deficit this year, meaning they spent more than they collected in taxes and other revenue. Secondly, 80% of them will do the same next year.

Argentina is the clear exception here. President Javier Milei declared in September to a joint session of the country’s legislature that he would do whatever it takes to get to a zero-deficit budget for the upcoming fiscal year.

The severe austerity needed to do so will be crippling to much of the country’s social services and human capital, but it also comes as welcome news to many, given the government has not run a fiscal surplus since the commodity-boom days of 2008.

If Milei is tightening the purse strings for 2025, his Brazilian counterpart is doing precisely the opposite.

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