Macri's Agenda Get Boost as Argentina Pension Bill Approved

(Bloomberg) -- Argentina’s lower house approved a bill on Tuesday that changes how pensions are calculated, clearing the way for President Mauricio Macri to push through other proposals designed to narrow the budget deficit and open up the economy.

Lawmakers approved the overhaul of the pension system by 128-116 votes and two abstentions, after more than 15 hours of debates. A riot outside Congress briefly halted the session, while a general strike against the changes added to pressure on Macri’s allies. The bill had already been approved by the Senate.

Undaunted by the resistance on show on the streets, Macri said Tuesday that he will press on with his reform agenda, which includes efforts to change the tax system and labor laws. His government has vowed to narrow an overall fiscal deficit that is forecast to widen to 6.1 percent of gross domestic product this year by cutting subsidies, widening the tax base and reducing labor costs.

“I’m not here to do what’s comfortable for me,” Macri said in a press conference in Buenos Aires. “There are nights when I find it hard to sleep because of the number and magnitude of the changes that need to be done - but I have to do them.”

The peso rose 0.2 percent to 17.53 per dollar Tuesday, the first gain in four days, as investors saw an improved outlook for Macri’s plans. 

During the pension reform debate, demonstrators hurled Molotov cocktails and rocks, briefly overwhelming police before reinforcements used water cannons and rubber bullets to repel them. More than 80 officers were injured and more than 50 people were arrested Monday. Protests continued until about 3 a.m. in front of Congress.

Macri said the violence was “clearly orchestrated,” pinning some of the blame on opposition lawmakers and said the justice system would be investigating.

“What happened here was something premeditated that aimed to make Congress not function,” Macri said.

The president has promised that at least four of his bills, including proposals to adjust the tax system and the 2018 budget, would pass before the end of the year. Critics of the pension overhaul said it reduced payments to pensioners. The bill modifies the way periodical increases are calculated by shifting to a methodology that primarily tracks inflation, rather than private sector wage growth or social security contributions.

To contact the reporters on this story: Andres R. Martinez in Buenos Aires at amartinez28@bloomberg.net, Charlie Devereux in Buenos Aires at cdevereux3@bloomberg.net.

To contact the editors responsible for this story: Daniel Cancel at dcancel@bloomberg.net, Walter Brandimarte, Philip Sanders

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