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Public works: Budget 2025 promises more funds but governors complain about projects already transferred - Infobae
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Obra pública: el Presupuesto 2025 promete más fondos pero los gobernadores reclaman por los proyectos ya transferidos
El financiamiento para gastos de capital tendría una recuperación en términos reales aunque tendrían un recorte en términos del PBI. Las provincias piden saldar otras deudas como las cajas jubilatorias no transferidas
www.infobae.com
September 18, 2024
Financing for capital expenditures would recover in real terms, although there would be a reduction in terms of GDP. The provinces are asking to settle other debts such as the pension funds that were not transferred.
By Mariano Boettner
In the last few hours, the Casa Rosada and the governors have already begun a classic dance that follows every presentation of the Budget projects: the fight over the final figures for financing infrastructure works and transfers to provincial coffers. The first numbers show that in 2025, after the very marked cut in discretionary items this year, there would be a recomposition in real terms, although still at low budgetary levels.
The issue appeared on the agenda of the first meeting held by national government officials with the majority of provincial leaders who, in person or by videoconference, heard firsthand what the guidelines of the income and expenditure law are. The Casa Rosada assured the leaders that the calculation of USD 60 billion of additional adjustment that corresponded to the provinces was only “figurative” since there was no way to sustain in practical terms that figure stated by Javier Milei .
In the exchange between the national government and the provinces, the claim for public works was one of the complaints that the leaders made on different occasions throughout the two-hour meeting. In the provinces they claim that the schedules with the details of the planned execution of public works do not coincide with the agreements signed between the Nation and the governorships in recent months.
For example, there are projects that the central government transferred to subnational jurisdictions with funding included, and in the fine print, as observed by the technical teams of the provinces, part of that funding would not be contemplated . Also, other works that the Casa Rosada reserved - such as national roads - would not have a budget included either.
The numbers, in nominal terms, show that capital expenditure items would see real increases after the sharp cuts they saw throughout 2024. The Argentine Institute for Fiscal Analysis (Iaraf), on the one hand, calculated based on the figures released in the bill that this year the nation's direct real investment would end with a real year-on-year drop of 46.4% , and would thus be the second item with the greatest cuts, behind capital transfers, which would see an adjustment of almost 83 percent throughout 2024.
By 2025, there would be a slight recovery in this spending line. According to the Argentine Budget Association (ASAP), capital expenditure for 2025 is expected to amount to $4.277 billion, which would imply, after discounting inflation, a real growth of 6.8 percent, " contrasting with the trend observed since the beginning of the current administration, during which a very significant deceleration of public investment has been verified," they indicated.
Among the components of capital expenditure, the same research center estimated that capital transfers would fall by the same amount - 6.8% year-on-year - and projected that their share of total capital expenditures would thus decrease by 7.5 percentage points, "reflecting the continuity of the behavior observed since the beginning of the current administration, of reducing this type of allocations."
In this regard, ASAP stated that "the message of the project indicates that the most significant allocations will be destined to provinces and municipalities, Enarsa, AySA and ADIF SE", one of the public companies in charge of the control and operation of the railway system.
The Government met with governors and outlined the main guidelines of the budget. The provinces are demanding payment of other accumulated debts
On the other hand, beyond the contraction of capital transfers, those that would grow would be the items of real direct investment (which in 2024 would have had a reduction of more than 46%). In contrast, it estimates that real direct investment would rise 24.7% in real terms and that thus its participation in the total "would increase by 6 percentage points next year, going from 35.9% to 41.9% in 2025."
The budget sheets submitted by the Executive Branch to Congress show, for example, that the allocations for National Roads will grow in nominal terms by 68% to just over 1 trillion pesos (about three quarters will be used for road construction and maintenance). 63% will be allocated to the National Water and Sanitation Works Agency, up to 108 billion pesos.
An analysis by the consultancy firm Politikón Chaco, which specializes in provincial finances, estimated based on official spreadsheets that “transfers to provinces and municipalities projected for 2025 would be in the order of $3.6 trillion .” Of that total, $3.3 trillion would be current transfers and $300 billion, capital transfers.
“The novelty in this case is that, even assuming that these are nominally low values in relation to the budget (they would be equivalent to 3.1% of expenditure), these transfers to provinces and municipalities would have an increase of 69.9% compared to the estimated closing for 2024,” something that could be explained by the low nominal numbers this year due to the fact that it is an extended budget.
National Roads will have a budget of 1 billion pesos
“Growth would be driven mainly by current transfers (+77.4%) and to a lesser extent by capital transfers (+21.1 percent). Thus, these consolidated transfers would grow almost twice as much as the estimated total expenditure (+32.8 percent). This projection falls into a certain contradiction (mainly discursive) with the desire of the national State to continue deepening the reduction of non-automatic remittances,” the report noted as a curiosity.
However, there is still not enough information to “determine exactly which program(s) would be supported by the estimated increase, since there is no disaggregated data for them.” “Likewise, the project does not disaggregate the distribution of these transfers by district,” he concluded.
The Government promised bilateral meetings on a case-by-case basis to review the numbers, and the governors plan to go to Buenos Aires with other claims in their suitcase in addition to public works, such as overdue debts for compensation for the fiscal pact (one province risked a figure close to $400 billion for all jurisdictions ) and the untransferred pension funds , which are still in the audit stage.
In the construction sector, with the first figures in hand, they believe that the cut in funding for public works will be sustained in 2025 and that capital expenditures will thus have a fall in the weight they have in the total budget. A source in the sector estimated that they would go from representing 1.6% of GDP to 0.7 percent .
