MercoPress. South Atlantic News Agency

Argentine Senate approves 2005 budget.

Early Thursday the Argentine Senate finally approved the 2005 budget which also extends discretionary “super powers” to the Executive with the purpose of redistributing outlays.

Revenue is estimated in 77,5 billion Argentine pesos (approx. 25 billion US dollars) and outlays 85,1 billion pesos (approx. 28,5 billion US dollars) with a surplus equivalent to 1,5 billion US dollars.

The overall budget expansion is 17% and is based on an annual GDP growth of 4% and 7,8% inflation.

The special superpowers clause enables President Nestor Kirchner to interchange expenditure items, and was finally passed 41 to 25 in the upper House.

Senator Jorge Capitanich from the ruling Peronist coalition argued that after 34 years of consecutive budget deficits, "we've finally managed to reverse the situation", and recalled that the current Executive has been "very prudent" in exercising those powers in the past, actually 0,7% of outlays last year.

Opposition Senators warned that the "government needs the super powers to transfer resources to pay for the foreign debt".

Last Wednesday the Lower House of Congress voted 121 against 81, a twelve months extension of the "economic emergency" powers which include "social, economic, administrative, finance and money exchange" areas.

Among other things the "economic emergency" situation enables the Executive to suspend labour redundancies when national unemployment is above 10,5%. Unemployment currently stands at 14,8%.

The economic emergency instrument was first established by former president Eduardo Duhalde in 2002 when the Argentine economy collapsed causing one of the worst social and economic crises of the country in living history.

The Kirchner administration argues that even when economic and social recovery has begun, the exceptional powers are justified given the "persistence of certain situations".

Argentina still has to reach an agreement with private creditors over the defaulted 2002 debt which now stands above 100 billion US dollars.