Buenos aires – Argentina’s President Javier Milei is pressing forward with aspiring economic reforms, and a key step in that process involves securing buy-in from the country’s provincial leaders. Interior Minister Diego Santilli is currently holding a series of meetings with governors to negotiate support for the 2026 budget proposal, a process intricate by a challenging fiscal situation and differing provincial needs.The government is attempting to incentivize cooperation through debt guarantees, signaling a potential shift in federal-provincial financial relations.
BUENOS AIRES – Argentina’s Interior Minister, Diego Santilli, is nearing completion of meetings with the country’s 20 governors as the government seeks support for its 2026 budget proposal. The effort comes as President Javier Milei’s administration pushes for significant economic reforms and grapples with a challenging fiscal landscape.
Santilli has already met with over half of the governors, focusing on achieving consensus “without losing fiscal balance,” according to officials. A key initial offer to secure provincial backing involves guaranteeing national endorsements for provinces seeking to take on debt, a move intended to ease financial pressures and unlock funding for infrastructure projects.
A significant outcome of the discussions so far is a general agreement that a 2026 budget will be established. While broad consensus exists, details remain unresolved regarding proposed changes to the distribution of tax revenue and the handling of debt accumulated by provincial pension funds since Milei took office. These unresolved items reportedly total around $5 billion.
Discussions have also touched on broad aspects of proposed labor reforms and potential changes to fiscal policy and the penal code. The government intends to submit the labor reform bill to Congress once the budget is approved.
Economy Minister Luis Caputo recently signaled a more cautious approach to tax reform, emphasizing the need to strengthen revenue collection through job growth and economic formalization – effectively, “expanding the tax base.” Several provinces are currently considering their own budget and tax laws for 2026, and their responses will indicate their stance on potential tax changes.
Governors who have participated in the meetings have indicated a willingness to consider reforms, but stressed they won’t approve proposals without thorough review. “Seeking consensus is not being a scribe,” one northern provincial leader summarized. Similar sentiments have been echoed by the private sector, with a general agreement that reforms are needed, but no specific commitments made.
The promise of national guarantees for provincial debt – whether from international organizations or financial markets – represents a concrete step forward in the negotiations. Santilli highlighted this offer during his meetings with governors, with Enterrian Governor Rogelio Frigerio suggesting it could “revolutionize” provincial road repairs.
On Friday, the national government formally offered a guarantee for a $75 million loan to Mendoza province for improvements to its water supply system in the Greater Mendoza and San Rafael areas. Such guarantees had previously been issued sparingly, with $1715 million authorized for various projects in seven districts in March.
The availability of provincial debt financing is seen as a way to alleviate pressure from governors seeking increased public works funding, as international organizations have funds available for infrastructure development.
No governor has yet secured concrete funding commitments, with the ultimate financial decisions still resting with Caputo. While governors have praised the government’s improved attitude and willingness to engage in dialogue, the meetings are largely exploratory. Allies describe a “paradigm shift,” while others remain cautious but optimistic.
Notably, Buenos Aires Governor Jorge Macri did not receive a positive response regarding a claim for $274 million in funds related to revenue-sharing agreements following a Supreme Court ruling. Governors Axel Kicillof of Buenos Aires, Gildo Insfrán of Formosa, Ricardo Quintela of La Rioja, and Gustavo Melella of Tierra del Fuego have not yet been scheduled for meetings.
Santilli is scheduled to meet with Chaco Governor Leandro Zdero on Monday at 11 a.m. and Rio Negro Governor Alberto Weretilneck at 12:30 p.m. at the Casa Rosada. These meetings are part of an ongoing effort to engage with the 20 governors who attended a meeting with President Milei following the presidential election victory of La Libertad Avanza.
