2024-08-23 14:18:36
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Argentina’s Senate voted overwhelmingly to increase pension spending, dealing a heavy blow to liberal President Javier Milley’s efforts to balance the national budget.
Senators voted 61 to 8 Thursday to approve a new pension formula that ties pensions to Argentina’s high inflation and wages.
Millais confirmed his earlier plan to veto the bill, calling the vote an “act of populist demagoguery.” In an interview with local media on Friday, he accused lawmakers of aiming to “overthrow this government.”
“The bill … sets high costs without corresponding budget provisions, which will force the government to resort to the old ways of printing money, raising taxes or borrowing, which have led to our failure over the past 100 years,” the president’s office said on X.
The bill has broad support in both the House of Representatives and the Senate, meaning lawmakers are likely to get the two-thirds majority needed to overturn it. Analysts say the administration will try to persuade them not to do so through negotiations.
The vote was a disappointment for Millais, who was elected last year on a promise to eliminate Argentina’s chronic fiscal deficit and reduce inflation. In the first half of this year, he achieved a primary surplus of 1.1% of gross domestic product by slashing social spending, public works and funding for Argentina’s provinces.
According to the Congressional Budget Office, the new pension calculation formula will result in an increase in pension costs of 0.44% of GDP this year.
“Taking care of retirees and ensuring predictability in public accounts should be the goal that guides all political forces,” Martín Lousteau, a senator and party president of the center-left Unión Cívica Radical party, said after the vote. He criticized the government’s current practice of using emergency decrees to set pensions.
Fernando Marull, head of financial consultancy FMyA, said Milley’s defeat in the Senate had a negative impact on Argentine asset prices on Thursday, with some sovereign bonds and stocks falling 3-4%.
“Investors see that the government wants to move in the right direction, but there is a lot of uncertainty about its political and managerial capabilities,” said Martín Rapetti, director of consultancy Equilibra.
Milley’s liberal-Progressive coalition controls just seven of the Senate’s 72 seats. All but one senator from its closest ally, the right-wing Yes Party, voted with the opposition on Thursday.
The move came a day after the administration overwhelmingly lost a House of Representatives vote on plans to increase spending on the intelligence agencies.
Milley’s relationship with lawmakers has been strained since he took office in December, when he addressed a crowd outside the Capitol instead of delivering his usual presidential address to Congress.
He has frequently called critical lawmakers “enemies” and “traitors,” though he toned down his criticism after Congress approved a scaled-back economic reform bill in June.
But in an interview on Friday, Millay said: “If everything goes well for the Argentines and things get better, those rats [in congress] Never coming back”.
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