Last night, the Senate approved the 2018 Budget and tax reform, capping its work for 2017 with a session that marked Senator Cristina Fernández de Kirchner’s debut on the floor.
The budget and tax reform bills, along with the renewal of the existing tax on cheques until 2022, complete the Macri administration’s package of economic legislation that it had asked Congress to consider after reaching an agreement with 22 provincial governors and the city of Buenos Aires. December has also featured the pension reform as well as votes on a deal with provinces on the redistribution of funds and limits on spending.
Senators spent close to eight hours last night debating the three bills (budget, tax reform and cheque tax) on the floor and all three of the Cambiemos bills were easily passed thanks to the support of the Peronist caucus, led by Río Negro senator Miguel Angel Pichetto. The Kirchnerite caucus, led by Cristina Kirchner, and its allies voted against them.
The budget was passed with 54 votes in favor and 14 against, tax reform was passed with 52 votes in favor and 15 against, and the renewal of the cheque tax was passed with 65 votes in favor, 2 against and one abstention.
The budget estimates a Gross Domestic Product (GDP) growth of 3.5 percent, a shade higher than the 3 percent for 2017, as well as average inflation of 15.7 percent and an average exchange rate of 19.30 pesos to the US dollar. The fiscal deficit is also projected to fall from 4.5 to 3.2 percent, and interest on debt will increase by 28 percent compared to this year. Debt as a percentage of GDP is expected to climb from 28.5 percent to 31.1 percent. Lastly, social spending is expected to be up by 22.1 percent compared to 2017.
All three economic bills received support in committee from the Argentina Federal caucus that is chaired by Senator Miguel Angel Pichetto (Río Negro). The Argentina Federal caucus represents non-Kirchnerite Peronists, a group that includes governors as well as mayors and party figures that don’t see eye to eye with the former president. The budget was approved in committee on Tuesday, which meant that a two-thirds supermajority was necessary for the bill to be approved on the floor.
Fernández de Kirchner has skipped committee meetings since being sworn-in earlier this month, arguing that an “express debate” was taking place. Although critical of some aspects of the budget, Pichetto on Tuesday responded to the former president with a comment during the committee meeting in which he underlined that his caucus was working to make changes and that it was essential for the a government to have a budget. He also needled Fernández de Kirchner and reminded her that there is a tradition of the Senate approving what the Lower House has sent in terms of budgets.