Milei anticipated a total veto of the pension law that ruins fiscal balance.

The tug-of-war between fiscal balance and clientelist populism became evident again this week, after the Chamber of Deputies approved by a wide majority an opposition bill that provides for a one-time 7.2% increase in pensions, the automatic adjustment of the pension bonus to $110,000, and the reinstatement of the pension moratorium for two years, without any offsetting cuts to support it.

Javier Milei was blunt: if the Senate passes this initiative into law, he will veto it without hesitation. "Let's hope senators don't support this populist demagoguery but in any case our commitment is to veto anything that threatens ZERO DEFICIT. End", the president stated on his X account, making it clear that the surplus is non-negotiable.

The bill, promoted by Unión por la Patria and supported by dialogue-oriented sectors such as Encuentro Federal, Democracia para Siempre, Coalición Cívica and some Radicals, was approved in the lower house with 142 votes in favor, 67 against, and 19 abstentions. Among those who voted in favor were also provincial allies of the ruling party such as Movimiento Popular Neuquino, Osvaldo Jaldo's Tucumán representatives, and Producción y Trabajo's San Juan representatives.

The initiative proposes a one-time 7.2% increase for all retirees, in addition to the increases already provided for by DNU 274/2024, which adjusts pensions monthly according to inflation. In addition, the $70,000 bonus received by lower-income retirees—frozen since the Kirchner administration—would rise to $110,000 and be updated each month for inflation on a cumulative basis.

This measure, combined with the reinstatement of the pension moratorium—which would allow access to pensions without the minimum years of contributions—represents a significant fiscal impact. The Government, committed to balancing public accounts, warned that these types of proposals break the path of fiscal order achieved after years of deficit and budgetary mismanagement.

Presidential spokesperson and elected deputy Manuel Adorni also spoke in strong terms:  "The President of the Nation will veto each and every bill that implies breaking fiscal balance. Populism is no longer part of the path. End", he stated, closing ranks with the Executive's firm stance.

In an attempt to disguise the impact, deputy Nicolás Massot (Encuentro Federal) proposed a series of complementary articles to justify the spending, including the elimination of tax exemptions for company directors and mutual guarantee companies, as well as the reallocation of $32.616 billion from the SIDE's reserved budget. He also proposed using the funds the State saved thanks to the reduction of IMF surcharges and nationalizing resources from the motor vehicle registries (ACARA and CSA).

However, these sources are insufficient, irregular, or of dubious legality, according to technical experts from the ruling party. There is no guarantee that such revenues will be permanent or attainable, which would make sustaining the measure unfeasible in the medium term.

Meanwhile, the bill establishes that ANSES must automatically transfer to provinces not adhering to the national system a monthly advance equivalent to one-twelfth of what was transferred the previous year, a measure that would also imply an automatic increase in public spending without a corresponding increase in revenue.