Reports indicate that during a lengthy session at Congress, between October 24-25, representatives from the ruling “Cambiemos” coalition managed to gather enough support to pass the 2019 Budget Bill in the Lower-House. The discussions took place against the backdrop of violent incidents in the vicinity of Congress. As previously assessed, unionized demonstrators and left-leaning groups protested against spending cuts contemplated in the Budget Bill. Demonstrators clashed with security services and vandalized nearby shops and cars, throwing rocks at police, who in turn shot rubber bullets to disperse crowds. At least 26 individuals were arrested following violent incidents. The Budget Bill must now be approved by the Senate (Upper-House). Sources indicate the vote could take place on November 14.
The Budget Bill contains steep reductions in government spending and tax increases aimed at cutting the primary fiscal deficit from a projected 2.7 percent of GDP in 2018 to zero in 2019. President Mauricio Macri committed to balancing the budget at the behest of the International Monetary Fund (IMF), which signed a 57 billion USD standby financing agreement with the Argentinian government earlier this year. While we assess the Budget Bill will pass through the Senate ahead of the G20 Leaders’ Summit slated for November 30-December 1, there remains uncertainty on whether the government will effectively implement austerity measures or flexibilize the budget for political gains ahead of the 2019 presidential campaign. Discussions at the Senate are likely to be protracted, as President Macri will have to negotiate with the opposition. As underscored by violent events outside Congress on October 24-25, tensions are most likely to surge ahead of the final vote, with large crowds of anti-government demonstrators gathering in the city center and outside Congress. Bearing in mind that left-leaning activists accuse the government of deliberately dispatching violent agents, allegedly to provoke scuffles in order to justify the forceful eviction of demonstrators, going forward activists will likely use these grievances to garner support for further demonstrations in Buenos Aires.