Following on from a Supreme Court ruling last week, President Cristina Fernández de Kirchner has signed an emergency decree (DNU) divesting withheld funds to several provinces. There aren’t exact figures on the cost this entails, but the estimates range from AR$80 to AR$125 billion and the whole thing is being interpreted as a huge blow to President-elect Mauricio Macri’s incoming government, as payment will likely impact funds that would have otherwise gone to social security.
These funds being handed over to the provinces are part of what is called federal co-participation (coparticipación federal), a system by which the State and the provinces divide the total tax revenue between the provinces and national entities. It involves a system of “discretionary transfers” by which the National Treasury transfers some of those funds back to the provincial governments in order to fund their public services and pay their employees.
Back in 1992, federal co-participation was cut by 15 percent in order to fund the National Social Security Administration (ANSES). Last week, the Supreme Court declared that this cut was not only unconstitutional but that the withheld funds should be divested to the affected provinces within 120 days. Check out The Bubble’s article on last week’s court ruling for a full explanation of federal co-participation.
But Cristina has decided to up the ante with Decree 2635/2015, published in today’s Official Bulletin. The decree not only complies with the Supreme Court ruling, but extends the measures to all the provinces and also specifies that the funds that would have gone to the ANSES must be covered by the National Treasury. Basically, this leaves Macri no other option than to pay up the huge sum immediately.
The Decree wasn’t solely economic, though: it came with a few comments on the importance of the decision, criticism of the Judicial branch and a kind of warning to the next administration. For example, the Decree states that:
“The public administration must adjust its conduct to the doctrinal guidelines established by the Supreme Court, refraining from questioning them or entering into an argument with them.”
A bit of a ballsy thing to say, considering the Kirchner administration has not yet complied with the Court’s ruling on making the details of the YPF-Chevron agreement public after being requested by the Court to do so.
Jorge Triaca, Macri’s future labor minister, today said the decree was indeed a blow to the future administration but was keen on reassuring retirees that a solution would be found.
“This is a huge blow to ANSES’ resources. We’re going to discuss it today with the ministers who are part of Macri’s future economic cabinet,” he said.”
“The truth is that this is a problem, but we will find a solution. We want to reassure retirees and pensioners that everything will be alright.”