Government’s setback in Congress, Omnibus law returns to commissions

ARGENTINA - In Brief 07 Feb 2024 by Esteban Fernandez Medrano

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In yesterday's Congress session, the government withdrew the Omnibus law from the debate in the Lower House and sent it back to the respective commissions for further discussions. This represents an important congressional setback, considering that the Omnibus law had already been trimmed, in prior negotiations, to halve its original articles and had achieved last Friday an approval in general terms. The political decision to withdraw the bill happened relatively early on during the approval process article by article, where some of the less convinced allies (UCR, Alternative Peronists and the provincial deputies) did not support the transfer of special powers requested by the executive, i.e., the ability to rule by decree on issues that usually request congressional approval. Milei decided to withdraw the bill before having approved a “bad law”. While such requests of “Attribution of Powers” by the executive are not uncommon in the last governments, Milei’s requests were among the boldest ever seen. The question that remains is what will be the government's next move? As we mentioned in previous reports, Milei might very well consider “doubling the ante” and calling for a plebiscite to put pressure on Congress and specifically on the governors, who are requesting more funding for their provinces. Recall that in an attempt to cut fiscal spending, Milei announced significant reductions in discretionary spending for provinces, which has always been a tool for political support. The Governors had also requested that the FX tax (impuesto pais) be coparticipated with the provinces, which the executive so far rejected. But in any case, Mile will need to find a way to balance...