Argentina plans lower infrastructure investments in 2024

Despite facing an adverse scenario in this Sunday’s general elections, Argentina’s government is planning lower public investment, especially in infrastructure, for next year. 

The 2024 budget lists 4,107 projects involving 5.30tn pesos (officially US$15.1bn) with the public works ministry earmarked to receive the most funds at 1.5tn pesos, according to the country’s 2024-26 investment program. 

However, the number of projects is down from 4,440 in the 2023 budget, and while the nominal amount is higher than the 2.33tn pesos in last year’s program, in real terms it is about US$200mn lower.

Transport projects are assigned 1.1tn pesos for next year, followed by energy, fuels and mining with 952bn pesos, housing with 721bn pesos and water and sewerage with 581bn pesos.

The amount of planned investments has been criticized by libertarian and presidential frontrunner Javier Milei, who won the most votes in the August primaries. 

Milei asked a court to block the federal government from launching tenders, awarding contracts or taking on new hires that could commit state resources beyond the end of the current administration on December 10, when President Alberto Fernández leaves office.

The court has not yet ruled on the issue. 

Prior to that, Milei sent a request to his rival in the upcoming elections and current economy minister Sergio Massa to halt the debate on the 2024 budget bill until after the elections, which the latter accepted though he did submit the proposed “law of laws” to congress on September 14 as legally required. 

Milei has vowed to slash government spending by 14% of GDP if elected. A key part of this move is his pledge to abolish public works and introduce a concessions model for infrastructure projects. 

That pledge has not been well received by key infrastructure players such as construction chamber Camarco, which has been heavily criticized by Milei for its alleged involvement in corruption scandals related to public works.

Most polls predict that Milei will face Massa in a runoff that would take place on November 19.

Whoever eventually wins, the new president will have to deal with the problems that have hamstrung the infrastructure sector in the last few years.

One of the bigger ones is inflation, which is running at well over 100%, with the construction sector hit especially hard by increases in prices of materials driven by logistics bottlenecks worldwide. 

After Milei’s triumph in the August primaries, the government ordered an 18% devaluation of the peso’s official rate against the US dollar, which was followed by 50% depreciation in unofficial markets.

Construction firms, which already have to deal with difficulties in accessing dollars through official means, said that after the primaries some materials were not delivered.