Zero Deficit Goal at Risk: Delay in Retirement Formula Approval and Implications for Javier Milei’s Government

In recent weeks, the retirement formula has emerged as another issue that could impact the goal of zero deficit for the Government of Javier Milei. Despite approval of the Bases Law and fiscal package, Victoria Villarruel has delayed treatment of this project that has already been partially approved by the Deputies. The objective is to add agreements to achieve a comprehensive reform of the pension system.

Villarruel has not provided any direction to committees working on the approved project, according to sources from the ruling party. A plenary session of the Labor and Social Security committees may be convened next week to start the debate on this issue. However, the Senate is cautious about providing a timetable for dealing with this matter and it is expected to take several weeks.

Both chambers of Congress have agreed to postpone contentious issues during July in order to allow implementation of recently approved rules and address economic challenges facing the country. The opposition blocs are also in agreement with this approach as they anticipate difficult months ahead for the second semester.

The government’s office, along with allies, is working on a plan for a comprehensive reform of the pension system to reduce political damage. The Senate has requested reports on the fiscal impact of the retirement formula, which is expected to be higher than initially estimated in approved project by Deputies.

The Union for Homeland bloc intends to move forward with retirement formula without modifications while receiving broad support from various parties in House of Representatives. The new mobility scheme is based on INDEC Consumer Price Index and includes an 8% increase account for inflation.

Overall, focus is on achieving a comprehensive reform of pension system while addressing economic challenges facing country and truce between parties allows further discussion and debate before implementation.