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New requirements for Argentine provinces seeking federal infra financing

Bnamericas
New requirements for Argentine provinces seeking federal infra financing

Argentine provinces and municipalities seeking to regain federal funding for halted public works will have to meet new requirements. 

According to a decree issued on Monday, which can be read here (in Spanish), only projects to build daycare centers, health infrastructure, urban transport, municipal infrastructure, and technical institutes will be allowed to proceed.

If provincial or municipal governments are found by the federal public works department to be in breach of any of these agreements, they run the risk of losing the funds if they don’t remedy their infractions.

After months of negotiations between the executive and provincial governments, the federal administration agreed to resume funding for projects nearing completion and those with multilateral funding. However, only about 15% of the projects halted last year fall into these categories.

Under this agreement, 914 projects would be transferred to local governments, while 2,000 would be canceled.

Country risk

The current political and legal scenario is unlikely to favor the large private investments coveted by President Javier Milei, as potential investors still face risks such as the high cost of financing and Argentina's history of not respecting contractual obligations, according to the head of the Córdoba chapter of construction chamber Camarco, Horacio Berra.

“Years’ worth of stability, legal certainty, and state policies that don’t’ vary when governments change are needed. That doesn’t happen in Argentina because we need a country where contracts are fulfilled,” Berra said during an infrastructure seminar held by the chamber.

The investment incentive program Rigi, approved under Milei’s economic Bases law, outlined benefits for projects with at least US$200mn in capex

Though the federal government claims that the new mechanism will bring in up to US$50 billion in investments, Camarco has warned that the investment requirement will hinder the participation of infrastructure projects.

Likewise, Berra called for smaller projects to be able to access Rigi. The chamber leader emphasized that Argentina's country risk – about ten times higher than neighboring Chile – translates into high interest rates for those seeking financing.

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