Argentina Pres. to Abide By Court Ruling On Funding

    Argentina Pres. to Abide By Court Ruling On Funding
    Last updated Dec 27, 2022
    Image credit: Reuters [via Al Jazeera]


    • Argentine Pres. Alberto Fernández tweeted on Monday that the federal government will comply with a top court ruling requiring the return of funds taken from the opposition-led capital city of Buenos Aires (CABA) in 2020 and given to the province of Buenos Aires.[1]
    • This announcement reverses his pledge last week to defy the decision, which he deemed "unprecedented, incongruous, and impossible to enforce," denouncing it as politically motivated and thus sparking a legal crisis in the country.[2]
    • Argentina's Supreme Court ordered the federal government to increase CABA's share of federal tax revenues to 2.95% amid a legal battle over the Fernández admin. cutting the capital's share from 3.75% to 2.32% in September 2020 before reducing it further to 1.4%.[3]
    • Fernández's latest statement, however, failed to appease the opposition as the federal government has insisted on paying CABA with the reportedly unquoted TX31 bonds, claiming they had been approved by the top court in a case with the province of Santa Fe.[4]
    • CABA Mayor Horacio Rodríguez Larreta's admin. instructed the City Attorney's Office to take "the necessary" steps for money to be transferred daily and not "replaced discretionally by another form of financing," including filing a complaint before the Supreme Court. Meanwhile, an impeachment request and a criminal complaint against the President remain underway.[4]
    • Pres. Fernández has seen his popularity fall ahead of the 2023 general election, with this case possibly casting another shadow over his administration, coming two weeks after a federal court found VP Cristina Fernández de Kirchner guilty in a high-profile corruption case.[2]


    Narrative A

    As judicial decisions are mandatory, the federal government will comply with this flawed Supreme Court ruling. However, Pres. Fernández is right to stress that the decision will produce dire consequences, affecting mostly the rights of the country's provinces and the federal budget. The payment will be made with the only budgetary resource available for 2022, TX31 bonds, which have already been used to meet the federal debt with the province of Santa Fe.

    Narrative B

    Despite the federal government's ill-informed claims, the fact of the matter is that these jurisdictions will benefit here. The quota corresponding to CABA has only ever been deducted from funds linked to the national government in the primary distributions, and Mayor Larreta has announced a gross income tax decrease that will result in a greater increase on the taxable base for the income tax collection, which is shared between the provinces.

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