Argentine provinces struggling to pay infrastructure contractors

Argentine provinces are still seeking resources from the federal government to finance infrastructure works, even though transfers from the latter continued to fall last month.

Some provinces have warned that the squeeze in financing has resulted in payment delays to contractors, though in the case of La Rioja local infrastructure minister Marcelo Del Moral said that the federal administration has pledged to start paying this week for certificates for projects that are already finished. 

He also said that federal public works secretary Carlos Rodríguez pledged to start sending funds this month for new projects, which had been withheld since March, Del Moral told Medios Provincia. 

In the case of Santa Fe, where authorities have admitted that projects will have to be slowed down or put on hold, the government reached an agreement with construction firms to pay 12.4bn pesos (US$48mn) worth of delayed payments in three instalments, the first of which was paid on Monday. 

Santa Fe also faces financing issues of its own, as its income has been hit by the drought affecting the agriculture sector, news outlet Rosario Plus reported, quoting local officials and construction executives who are currently negotiating further debt payments. 

Amidst this, governor Omar Perotti met with economy minister Sergio Massa on Tuesday to discuss public works financing, among other issues, daily El Tiempo reported. 

Perotti has already called for a better distribution of federal funds among provinces, particularly in transport subsidies where he has criticized the concentration of funds in Buenos Aires.

FEDERAL TRANSFERS

Funding through the tax revenue sharing scheme (CFI) fell 2.7% year-on-year during June, following a 0.9% decrease in May, while additional federal funding under the RON program dropped 1.9% last month after a 2.1% fall in June, according to economic policy think tank CEPA, citing economy ministry data.

CFI and RON have completed a full quarter of negative numbers and so far this year only March registered a positive variation.

As of 2021, provinces received on average 70.3% of their funding through CFI and RON.