Argentine provinces facing harsher infra financing scenario under Milei

Argentina’s provinces are struggling to adapt to restrictions on federal financing, which are affecting their capacity to progress with infrastructure projects. 

One of President Javier Milei’s main campaign pledges was to halt almost all public works expenditures shortly after taking office on December 10, which affected projects in provinces that were partially funded by the national administration. 

While authorities say projects under construction are safe from libertarian Milei’s so-called chainsaw measures, firms complain of a lack of clarity. 

In Salta province, for example, there are at least 100 ongoing projects with federal financing, and the local construction sector is in the dark regarding their future. 

“The federal government doesn’t tell us anything,” the head of the Salta chapter of construction chamber Camarco, Juan Pablo Segura, told news outlet Aries Online, warning that up to 10,000 direct jobs could be at risk. 

A similar situation is being reported in Santa Fe, where local firms were warning about payment delays and projects being halted or slowed even before the presidential election.

“There are 188 ongoing projects [in Santa Fe]. They already have work done. Companies have invested and paid for the workforce and materials. That’s the biggest concern,” the head of Camarco’s Santa Fe city Rosario branch, Rubén Llenas, told LT8.

In January to October 2023, provinces received 59.2bn pesos (US$163mn at the time Milei took office) in capital transfers from the federal government for roadworks, according to Buenos Aires-based think tank CEPA, based on data from the interior ministry.

The figure represents 22.8% of all capital transfers in that period. Another 30.3bn pesos, or 11.7% of capital transfers, were for other public works. 

Argentina’s provinces are heavily dependent on the federal government for financing in general, not just for infrastructure.

As of November, on average provinces obtain 56.6% of their income through the federal tax revenue sharing scheme (CFI), and the number increases to 70.3% once additional funding from the central administration (known as ROI) is included, according to CEPA. 

These resources had already been declining in the months leading to the election, the first round of which was in October and the runoff in November. 

Shortly after taking office, Milei’s economy minister Luis Caputo said the federal government aims to reduce discretional transfers outside the CFI to provinces “to a minimum,” but no more details have been given since. 

Milei also held meetings with governors last month to gather support for his sweeping ‘omnibus’ bill, which aims to cut back the state's presence in large swathes of the economy. 

Debate of the bill is scheduled to begin Tuesday in the chamber of deputies, according to official documents.

But the text is already getting pushback from some governors, state news agency Télam reported on Monday, quoting criticism from the heads of Mendoza, Catamarca and La Rioja provinces, among others. 

Support from governors is considered key for the bill's success, as Milei's La Libertad Avanza party does not have a majority in either chamber of congress.