A few days before the end of the year, the Government withholds funds for $800,000 million from governors

In the midst of the budget debate, the Executive accelerated its distribution among allied governors and the transfers totaled $198,000 million throughout the year. That figure, however, represents only 20% of a total budget of more than $1,000,000 million, according to parliamentary and Empiria calculations. So, Seven days before the end of the year, the Casa Rosada has a remainder of more than $800,000 million.

It is considerable firepower compared to the $66,000 million transferred in the first two weeks of December to Osvaldo Jaldo (Tucumán), Hugo Passalacqua (Misiones), Leandro Zdero (Chaco), Raúl Jalil (Catamarca), Rogelio Frigerio (Entre Ríos) and Gustavo Sáenz (Salta). A sweetener that was not enough to prevent the fall of Chapter XIwhich repealed funding for universities and disabilities.

In that way, The leftover ATN could play a key role in the coming hourswhen the Government is preparing to resume the debate on the 2026 Budget in the Senate. Or its fate could be different: in official offices there is anger over the governors’ rudeness last week, which implies a fiscal cost of more than $7 trillion (0.7% of GDP). For this reason, they do not rule out closing the wallet and punishing them.

Then, The Treasury would keep the funds to maintain fiscal balance. Usually, the collection is not distributed in its entirety in the annual fiscal period. When this happens, although the central government cannot allocate the resources to other purposes, the undistributed funds reduce national spending and therefore increase the surplus or reduce the fiscal deficit.

Javier Milei said days ago that he will “accommodate” the items that are necessary to maintain the zero deficit. And the Minister of the Interior, Diego Santilli, told Clarín that they are going to “reduce spending.” The Chief of Staff, Manuel Adorni, and the Minister of Economy, Luis Caputo, will influence the decision. “They are going to take it from the provinces, you screwed me, the ATN that is not used goes into surplus“said a source from the economic team.

The tension with the provinces over these resources has been going on for a long time. The contributions are made up of the collection of 1% of the co-shareable mass of national taxes collected, that is, those that are automatically distributed to the provinces, but The national government decides when and to which jurisdictions to allocate resources. Therefore, they function as “subsidies”according to the definition of the late researcher and economist Oscar Cetrángolo.

In fact, the ATN end up being a tool of central power, with a greater allocation to politically aligned or relevant provinces for fiscal negotiation. Néstor Kirchner allocated 8% of the resources, Cristina Kirchner barely 7% and Mauricio Macri 20%, while Alberto Fernández implemented almost 90% within the framework of the pandemic and Javier Milei distributed 15%, marking a break in the distribution logic.

“The province of Buenos Aires is no longer the main recipient of ATN and transfers to traditionally favored provinces were practically non-existent. In this new scenario, the ATN functioned as an instrument of political negotiation with governors, in a context of cutting other budget transfers,” said a report by IDESA and Politikon Chaco.

The bastion of Axel Kicillof, which managed to concentrate close to 30% of the contributions with the Kirchners and Macri, was one of the most affected with Milei (3.7%), along with CABA (0.0%). Instead, The allied districts – the governors who broke with Kirchnerism, respond to the UCR or the PRO – were the most benefitedsuch as Tucumán (16.4%), Misiones (13.9%), Entre Ríos (10.6%), Salta (10.2%), Catamarca (8.15), Neuquén and Chaco (6.7%), and Chubut (5%).

The new political map coincides with the adjustment in current and capital transfers to the provinces, one of the expenses that registered the greatest decrease. Since the beginning of the administration, the governors lost $8 billion in real terms for this concept, according to the IARAF. In this way, the ATN appear as a key support for La Libertad Avanza’s alliances with the districts and compensate, although very partially, the cut in other resources.