President Javier Milei on Monday struck down a law passed by Congress that would force the government to boost spending on retirement and pensions by more than eight percent.
Milei, 53, issued a veto to strike down the entire law passed by both chambers of Congress last week, which also established a new formula for calculating pension updates based on the evolution of prices and the wage index.
The head of state signed the veto last Friday, but it was only published on Monday via decree 782/2024 in the Official Gazette.
The government defended its move as a bid to maintain fiscal solvency, arguing the impact is too much of a strain on state coffers.
Citizens in Argentina are currently struggling with an inflation rate running at more than 250 percent per annum. The minimum pension in Argentina is currently 225,454 pesos, or around US$230 at the official exchange rate.
However, the basic basket of goods for retirees, as measured by the Defensoría de la Tercera Edad (Ombudsman for the Elderly) costs 685,041 pesos in March (around US$700, the most recent updated measurement).
Private estimates suggest that today the basket exceeded 900,000 pesos (around US$918), in July, due to increases in the price of medicines, rents and public services.
Publication of the veto comes after Milei met with the heads of allied caucuses in a meeting also attended by presidential chief-of-staff Karina Milei and Cabinet Chief Guillermo Francos.
Congress can overturn the president's veto and make the law stand if it reaches a two-thirds vote in both chambers, where the ruling party is in the minority.
Casa Rosada sources stated that Milei explained his reasoning to the lawmakers as he sought to persuade them not to back the effort to overturn his veto and reinstate the law.
In a concession, the government announced Monday that it would make a one-off payment to pensioners of up to 70,000 pesos in September.
Since he took office on December 10, the president has made “fiscal balance” one of his government's main goals.
According to the decree, Milei vetoed the law because it “manifestly violates the current legal framework in that it does not consider the fiscal impact of the measure, nor does it determine the source of its financing.”
In contrast, at the end of July, Milei decreed an increase of some US$102 million for the Intelligence Secretariat's reserved expenses – without accountability – which represented an increase in its budget of more than 700 per cent.
In the first half of this year, Argentina recorded its first fiscal surplus since 2008 thanks to the implementation of drastic spending cuts that led to the paralysis of public works, the layoff of tens of thousands of state employees and the freezing of funding for education, health and social welfare.
Private studies estimate that more than 33 percent of Milei’s fiscal adjustment has fallen on the retirement and pension system, from which some seven million people benefit, due to a lack of updating.
Inflation has dropped from 20.6 percent monthly in January to four percent in June, though the economy is in the grips of a deep recession with a collapse in consumption and rising unemployment.
GDP fell 5.1 percent year-on-year in the first quarter and more than half of the population now lives in poverty.
– TIMES/AFP/NA
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