The income that millions of retirees in Argentina will receive is experiencing moments of uncertainty after Parliament approved, by a large majority, the law that regulates the increase in pensions and the president of the country, Javier Milei, announced this Friday that he will veto the norm in pursuit of a ‘zero deficit’.
According to the criteria of
“The president promised the Argentines to maintain the fiscal surplus at all costs and he will do so,” the President’s Office said early Friday, announcing that Milei will veto the law.
The president promised the Argentine people that he would maintain the fiscal surplus at all costs, and that is what he will do.
The Senate approved and signed into law this Thursday a project that establishes a new formula for updating pensions and that had already received the approval of the Chamber of Deputies in June.
The Executive considered this approval as an “act of demagogic populism” and called the law “irresponsible, illegal and unconstitutional” because “it establishes exorbitant expenses without its corresponding budget allocation.”
The Milei Administration, which last December, just after taking office, launched a severe adjustment plan that would allow the fiscal balance to be restored, argues that this law will entail an additional expenditure of 1.2% of GDP, “forcing the State to contract debt.”
What do the Argentine Government and Constitution say?
The Executive insisted that the project approved with “the consent of all political parties” is “a moral fraud, an act of populist demagogy and fiscal irresponsibility and, therefore, will be vetoed.”
The Argentine Constitution allows the president to veto a law in whole or in part, a veto that Parliament can overcome by putting the bill to a vote again and obtaining the affirmative vote of at least two-thirds of both legislative chambers.
Pension spending has been one of the most affected by the Milei Government’s fiscal adjustment plan, which last March decided to update pensions by decree and not through the formula that had been in force since 2021.
In a scenario of severe economic crisis in Argentina and with one of the highest inflation rates in the world, 65% of the country’s 6.5 million retirees receive the minimum pension, which this month was 225,454 pesos (233 dollars at the current official exchange rate), an income that reaches 295,454 pesos due to the reinforcement bonus that social security has been granting for several months due to the emergency situation.
This income, which represents 82% of the legal minimum wage in Argentina, marginalizes retirees into poverty.
The approved law establishes a monthly update formula that combines the inflation index and the average variation of formal salaries, plus an extraordinary adjustment of 8.1% for retirees.
After announcing that the law would be vetoed, the Government announced that the pension update by decree will be 4% in September.
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