Argentina’s 2025 budget bill further pressures provincial infra plans

The cuts outlined in Argentina’s 2025 budget bill, which would force provincial administrations to slash expenses by around US$20bn, will put additional pressure on their efforts to keep public works ongoing as they were already struggling with reduced federal financing. 

Provincial governments are expected to present their own budgets for next year over the coming weeks.

“I imagine that provinces will take the general framework of the national budget, but I don’t believe they will reflect the level of adjustments [President Javier] Milei is aiming for,” Hernán Letcher, head of Buenos Aires economic policy think tank CEPA, told BNamericas.

Federal transfers to provinces fell 18.6% year-on-year during August, CEPA reported using data from the economy ministry and statistics office Indec. On average, the item has fallen 14.1% this year. 

In normal circumstances, provincial governors would use the debate of the budget bill to negotiate funding for infrastructure projects in exchange for supporting the federal administration in congress, where governors have a large influence on how legislators representing their provinces vote.

Letcher does not believe this will be the case with Milei’s budget.

“I don’t see the national government discussing public works for provinces,” he said. While he does expect tense negotiations, Letcher declined to predict the final vote in congress. 

“The truth is provinces have made many concessions [in negotiations with Milei], because they are afraid that the national government will take even more funding away from them,” he said.

One province that has defied right-wing libertarian Milei’s austerity rule in public works is Buenos Aires, led by former economy minister Axel Kicillof, which announced an increase in the provincial 2024 infrastructure budget earlier this week.  

The assignation will reach nearly 696bn pesos (US$720mn) by December, nearly three times the original amount budgeted for this year, local public works minister Gabriel Katopodis said in a press conference. 

Kicillof, from the opposition Peronists, has yet to present a bill for the 2025 provincial budget, though Letcher expects it will be limited by the lower financing from the federal administration, which since 2021 has represented around half of the province’s total resources, according to CEPA reports.

“Provinces don’t have the resources to do large-scale works. Those can only be executed by the national administration,” he said.

According to the Buenos Aires government, the number of active federally funded public works projects in the province went from 2,308 at the end of 2023 to only 97 at end-June.