Argentina Pres. to Abide By Court Ruling On Funding

    Photo: Reuters [via Al Jazeera]

    The Facts

    • 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.

    • 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.

    The Spin

    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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