In a new chapter of the fight with the governors, Javier Milei has transferred control to some 29 trust funds to the Minister of Economy, Luis Caputo. This is a box of approx $1.7 billion which the President tried to eliminate, but given the impossibility of doing so through Congress, he decided place it under the orbit of the Treasury Building for your inspection.
The decree published in the Official Journal designates the Ministry of Economy as trustee in all trust funds integrated in whole or in part with assets and/or funds of the national State, exercising in this capacity the direction and management of said trust funds. That way, The portfolio will be entrusted to the trusts previously managed by Banco Nación and BICE.
On the other hand, the Economy will effect a global management control of the trust funds within a period of 60 days, with the assistance of the General Sindicatura de la Nación (SIGEN), a decentralized body operating within the Presidency of the Nation, or by hiring independent external consultants with recognized expertise and experience. . The first scandal with these funds broke out when it was ascertained that FISU, the Fund for Socio-Urban Integration – which managed Juan Grabois– had completed very few of the jobs he intended to do.
According to the decree, the audit aims to “identify critical and problematic areas for the operation of each trust fund and evaluate the convenience of its continuity“. “The idea is to control them and take care of the money so that it is not wasted“It does not imply defunding, but transparency”, explain Economy sources, but the measure would also have a fiscal and financial impact.
In principle Caputo will have greater powers regulate the provinces in a prelude to negotiations that will begin on Friday. After the conflict with Chubut, the government seeks to re-discuss the Bases Act in Congress in exchange for a fiscal agreement with the governors, who ask for a cut in discretionary transfers, including trust funds.
The ruling party’s deputy José Luis Espert recognized in the last few hours that one of the conditions before the “May 25 Pact” invoked by Milei last Friday, is that “the governors show their face and cover up what they need”, such as “extra co-participation things like trust funds.” According to Espert, these funds represent approximately $3.5 billion.
The latest official report on trust funds shows that they received resources of $1.7 trillion (almost 1% of GDP) in the third quarter. The main ones are the Transport Infrastructure System (41.5%), Social Housing (13.8%), Socio-Urban Integration or FISU (9.9%) and Procrear (8.4%), among others who today have a fiscal surplus (more income than expenses).
The trusts are financed with taxes and budgetary resources to finance public works, housing and subsidies. With the decree Caputo will have another tool to improve the fiscal accounts seen by the IMF. The fact is that if spending implementation is slowed or stopped even more, the trusts will have a larger fiscal surplus and may allocate that surplus to purchasing Treasury securities.
In recent weeks, Milei has warned that trust funds are “political black boxes” and threatened to eliminate them. Although he has not yet managed to finalize it, the Government made progress last week in dissolving by decree the Fiscal Strengthening Fund of the Province of Buenos Aires and in cutting FISU funds, intended for the urbanization of popular neighborhoods.
Now, the transfer of funds to the Economy portfolio has raised alarm bells in provinces that depend on them for public works and to subsidize transport or energy. The Government relied on a report it requested late last year from SIGEN to set a limit due to a change of administration on 7 December 2023 at all levels of the State, including trusts.
According to this report, cited in the preamble to the decree, it was noted “the non-existence or obsolescence of the administrative procedures” that define the functioning of each trust fund, as well as “the absence or lack of integrity and systematization of the supporting documentation of the trust fund”. financing processes, which makes it difficult to ensure transparency.
SIGEN also warned about “weaknesses in the processes of reporting or recording administrative, accounting and/or financial information and, in some cases, lack of monitoring and control, as well as weaknesses in the processes of recording and systematizing information on administration and management of trust funds and delays in audit processes”.
And in another section of the premises it is indicated that “there has been inertia and/or delay in the recovery and management activities of defaults or bad debts due to defaults on the part of the beneficiaries, as well as weaknesses in the purchasing and negotiation process, lack of follow-up and unjustified delays”.
Source: Clarin
