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'Thus, we will enter default', the President warns
La Nacion
August 19, 2010

By Mariano Obarrio

The official strategy is to block the bill in the Senate to not have to turn to a veto

President Cristina Kirchner yesterday condemned the bill on 82% minimum mobile pensions that is speeding to approval in the House of Deputies and that the government will intend to block in the Senate to not have to come to a presidential veto, an option they do not rule out. The president yesterday, on this issue, fixed her argument: "If they approve the bills that are being presented" by the opposition blocks, "in three months we enter into default."

While speaking about de-financing and default, the head of State also referred to the opposition bill for lowering of export taxes on soy beans, corn and wheat. For those rights, she added, the Nation co-participates with all the provinces including non-soy provinces in the Federal Solidarity Fund (FFS, the soy fund) with 7 billion pesos a year.

Also, that bill would be vetoed if the government doesn't manage to block those tax reductions in Congress.

In relation to both initiatives, in the government yesterday they commented to LA NACION that they will warn opposition senators and deputies that their provinces could lose resources: if they raise pensions, it will reduce funds for universal child benefits and computer repairs; if they lower export taxes, part of the soy fund will be lost.

Regarding the risk of default in three months, the President left out mentioning that the fiscal impact of the increase would be 2.3 billion pesos a month, which would not mean any risk for debt payments.

"Many opposition senators will not vote to reduce resources for their provinces" a high official source told LA NACION. "And if the Senate does vote that way, they will be vetoed. But no one wants to say that because of the high political cost it would bring," the source added.

For that reason, Cristina Kirchner accused the opposition of having a "default" of "ideas, bills and proposals" and blamed it for announcing "catastrophe for catastrophe". She then asked for "a little good faith" for the government.

Consulted by LA NACION, the general undersecretary for the Presidency, Gustavo Lopez, said that the 82% mobile bill "is contradictory, opportunistic and not achievable." And he said that the opposition "opposed the nationalization of the AFJP, pension mobility and now wants to use those nationalized resources to raise pensions more than it can be done, for which the system would last a year. It cost a lot to get here."

Explaining the model

At an event in the Casa Rosada to announce financial assistance to the provinces, the President demanded that her opponents "explain once and for all what the model is that they want for the country." And she added: "It would be good if they'd produce an inflow of ideas and sustainable legislation, viable legislation, that will not alter the fiscal surplus."

"If they pass the bills that they are presenting, in three months we enter into default," she warned.

She also said that "since April of last year to the day we have remitted in cash to the Federal Solidarity Fund from Soy 7 billion more to the provinces." And she said that "even the Federal Capital (the government of Mauricio Macri) has received, while there was not one grain of soy, 166 million pesos." The meta-message is: if export taxes are cut, there will be less money for the provinces.

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