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Franco issues Senate warning post House approval

The Council Head asserted this morning that the proposed initiative, pending Senate approval, demonstrates a significant level of political negligence, due to its potential impact on fiscal equilibrium.

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The Senior Adviser expressed this morning that the proposed venture, pending Senate approval,...
The Senior Adviser expressed this morning that the proposed venture, pending Senate approval, demonstrates an alarming disregard for financial responsibility in terms of budget balance.

Franco issues Senate warning post House approval

Hear Ye! Hear Ye! The Deputies Just Raised Retirement Benefits, But Do We Really Need That?

In a bold move, the Chamber of Deputies approved an emergency increase in retirement benefits late last night, taking a swipe at the administration of Javier Milei. Guillermo Francos, Chief of Cabinet, issued a stern warning to the Senate, due to discuss the matter on Thursday, regarding the potential impact on fiscal balance and public spending.

"So, are we going to increase taxes?" the coordinating minister posited, adding that the President will veto the reform if it becomes law. Francos scrutinized the numbers, stating that 3.8 million retirees, out of a total of 5.7 million, did not make contributions, double the number of those who did.

The proposal includes a one-time 7.2% increase in all pension scales due to the unrecognized inflation in January 2024, as well as the update, by mobility index, of the bonus Anses pays to retirees receiving the minimum pension, which would boost the monthly amount from $70,000 to $110,000.

Francos expressed that the Government feels the same empathy but believes that Congress is expressing it in a manner that the State cannot afford. He also suggested that the opposition's objective in voting for the raise is to disrupt the fiscal balance. "The Government won't let that happen since our goal is to maintain the fiscal balance," Francos asserted.

He continued by expressing concerns about the future of the initiative, now in the hands of the Senate. "We'll talk to the senators and explain the issue to them. Let's hope they understand. If not, they'll need to specify where the funds will come from. Yes, that's our intention," he cautioned.

Francos hinted that the government would increase taxes if the senators insist on the pension hike. "If we've already made significant reductions in expenses and are in balance, where will we get the funds for the increases they're seeking? That's the game, trying to leave the national government in a situation where it has to veto a law, appearing to public opinion as uncaring," he warned.

To conclusively reinforce his points, Francos reiterated that legislators must explain where the funds will come from to finance the increased retirements and confirmed Milei's threat to veto the project if it becomes law.

"Let them specify where we will get the funds and the taxes that need to be increased. We need to provide time for the economy to adjust, which is to continue reducing costs, expenses, taxes, and generating greater formality. We will continue maintaining the fiscal balance, reducing inflation, generating activity, and anything that goes against that, the President will veto," Francos concluded.

Contextual Insights:- The Argentine government has recently been addressing retirement benefits, managed by ANSES, through increases and proposed changes.- The government has already implemented a 2.78% pension increase and a one-time bonus for those receiving the minimum benefit in June 2025.- The lower house of Argentina approved a 7.2% pension increase in early June 2022, following a contentious debate.- Despite these increases, pensioners still face challenges due to rising living costs and inflation.- The government has faced criticism for not extending the pension moratorium for retirees who did not contribute sufficiently to Social Security.

  1. The debate over the emergency increase in retirement benefits, initially approved by the Chamber of Deputies, has now shifted to the Senate, where the potential impact on fiscal balance, finance, and business is a key concern.
  2. As the Senate discusses the retirement benefits policy-and-legislation, politicians are considering various options, including potential tax increases, to finance the proposed increases, a matter of significant interest to the general public and financial analysts.
  3. The discussions surrounding retirement benefits are not merely domestic issues; they also have profound implications for international investors, as they weigh the stability of the Argentine economy against the growing need for social security improvements among the aging population.

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