Seeking to overcome congressional difficulties and end a dispute between the Casa Rosada and Argentina's 23 provincial governments, President Javier Milei has announced that the nation will spend a second consecutive year without a fresh budget bill.
Via Decree 1131/2024 published in the Official Gazette, Milei extended Argentina's 2023 budget for a second straight year – an unprecedented move in national politics.
The decision aligns with his strict fiscal adjustment plan, austerity cutbacks and ongoing negotiations with the International Monetary Fund (IMF).
"It is appropriate to extend the resources, financial sources and credits in effect at the close of fiscal year 2024," stated Milei's decree, published on Monday.
The decision comes in the context of an accumulated inflation rate of 628 percent between November 2022, when the last budget bill was passed, and November 2024, according to official data.
Last September, Milei had presented a proposed budget bill to Congress, which projected an annual inflation rate of 18.5 percent and five percent for 2025.
However, the law failed to gain approval in Congress. The opposition's proposed amendments, such as increased funding for pensions and universities, ran into presidential vetoes upheld in Congress by Milei's ruling La Libertad Avanza party and its allies, which argued that they would undermine the government's plan to achieve a fiscal surplus.
"If passing the law means risking or sacrificing our fiscal anchor, the most important aspect of our model, it’s not worth it," said Economy Minister Luis Caputo in early December during an interview with the LN+ channel.
Beforehand Caputo had flatly rejected a series of demands by the provincial governments which included paying off provincial pension fund debt and submitting fuel taxation to federal revenue-sharing – demands which the government quantified as US$3.7 billion.
Nevertheless, if the provincial governors had dropped these demands and accepted the original draft Budget, Milei would’ve be open to submitting it to Congress in February while keeping a decreed renewal of the 2023 Budget up his sleeve, government sources said – a solution which would not be considered optimal by either the provinces or the IMF.
Critics say the government is undermining transparency as the decree grants the Executive branch discretion to manage the state's accounts, rather than Congress.
In a statement, ASAP (the Asociación Argentina de Presupuesto y Administración Financiera Pública or the Argentine Association of Budget and Public Financial Administration) noted that this is the first time two consecutive budget extensions have occurred.
In a press release, ASAP described this situation as "a setback in the institutional framework of the National Public Sector."
Opposition legislators also criticised the unilateral extension, claiming that the government never truly sought the passage of its 2025 Budget or its serious debate, omitting it from this summer’s extraordinary sessions in Congress.
"Milei deliberately stalled sessions and blocked agreements to ensure the Budget [bill] wasn't approved so he could spend as he pleased, like a petty monarch," wrote national deputy Margarita Stolbizer, a government critic, in a post on the X social network.
Pro-government deputy José Luis Espert snapped back: "There will be a new law when politics accepts three things at the same time: zero deficit, reduced public spending and no tax increases."
The budget extension comes as Argentina seeks a new financing deal with the IMF to replace its existing US$44.5-billion loan agreement.
Milei's government is optimistic it can seal a new deal with the IMF quickly, emboldened by the electoral victory of incoming US president Donald Trump.
The Republican leader has voiced his support for Milei and his government but last week Trump appointed Mauricio Claver-Carone, the former head of the Inter-American Development Bank (BID in its Spanish acronym) until his ouster in 2022, to oversee Latin American affairs at the US State Department.
Claver-Carone has been critical of Milei. "The strategy of buying time while expecting Trump to secure more IMF funding is an illusion, illogical, and bound to fail," he said in a July interview with Uruguayan news outlet El Observador.
Government extends prohibition state media advertising
A government resolution has extended for a further year the suspension of state advertising campaigns in media which “cost money” by either the national public administration or Banco Nación.
Signed by Presidential Spokesperson Manuel Adorni, the government resolution prolongs the prohibition of state advertising, a measure in line with the fiscal austerity policies of the Milei administration.
Resolution 7147/2024 recalls that Decree 89/23 suspended state advertising “with the double objective of streamlining the structures and procedures of the national administration and making public spending criteria more efficient, given the country’s circumstances at the time that decree was finished.”
At that time priority was given to “the criteria of austerity and efficiency in the use of the scarce public funds when assigning priorities.”
Last June 27, Congress approved the ‘Ley de Bases y Puntos de Partida para la Libertad de los Argentinos’ omnibus bill declaring a public administrative, economic, financial and energy emergency for the period of a year.
– TIMES/AFP/PERFIL
Comments