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A country without public works: Milei already recognizes the infrastructure problems but does not have a plan to replace the State
The President promised a system of private initiatives to replace State spending, but five months into the government there was no progress. The fallacy of the Chile model.
The construction sector is one of the most affected by the recession. Like all productive branches that are not exported, under the Milei model its death certificate has been signed. Without any sign of reactivation, it is an official decision to paralyze public works indefinitely, although Milei himself has recognized that the competitiveness of the countrys economy is affected by infrastructure deficits.
He did so this Thursday at lunch with businessmen from the CICyP, where he recognized that Argentina faces problems of "soft" infrastructure, as he defined the regulations, and of "hard" infrastructure, that is, of routes, ports, trains and other goods that even Now they were addressed with public works financed by the State through what is known as source 11.
"There is no exchange delay, I have an infrastructure problem and we are working with the DNU and the Base Law on the soft infrastructure, the contracts and we are looking for private initiative mechanisms to resolve the hard infrastructure," he stated.
During the campaign and even after winning the runoff, Milei repeated on several occasions that public works was a "job" and that the model to follow for infrastructure works was that of Chile. «We are going to do it with the Chilean model. Look on the other side of the mountain range, it works great. "It is not suitable for the corrupt," she said in November last year.
However, five months into the government there is no indication that progress is being made in that direction. «There is no bill, decree, ministerial resolution that advances the model of private financing of public works that Milei declaims, but no one knows. The government did not even organize a seminar to debate the models,” a construction businessman explained to LPO.
The question is why the Government does nothing. In the sector they believe that the paralysis of public works began marked by the need to adjust spending and that now the government does not really know which model to implement, plus a certain management inability.
There is no exchange delay, I have an infrastructure problem and we are working with the DNU and the Bases Law on the soft infrastructure, the contracts and we are looking for private initiative mechanisms to solve the hard infrastructure.
The former Minister of Public Works of Chile, Carlos Lorenzen, explained that talking about "a single" public works scheme in Chile is somewhat pretentious. "In any case, what exists are different models of public-private partnership, to resolve some important investment bottlenecks, which have been very successful but do not fully replace the importance of public investment," he said.
Macri tried in his government to advance with the PPP system that Chile applies and it was a resounding failure because Argentinas macroeconomic instability multiplied the cost of the works by three due to the financial risk.
In the same sense, from the Argentine Chamber of Construction (Camarco) they specified to LPO: «In Chile, 85% of the investment in infrastructure is borne by the State, while the other 15% is contributed by the private sector and of that 15% only 8% is at risk. The other half has assured repayment," they stated from Camarco.
According to Chiles own Ministry of Public Works, the government invests 4.1% of GDP in public works. The number doubles the real consolidated direct investment in Argentina, which was 2.8% of GDP in 2022, the latest data available.
The contradictory thing is that Milei, defender of the Chilean model, until now maintained that only the private sector will carry out the works: "If it is not profitable for the market, then it is not socially desirable." It is not Chiles criterion, which Milei proposes to follow.
Leonardo Daneri Jones, president of the Association of Public Infrastructure Works Concessionaires, which brings together the large construction companies in Chile, explained to Diario Uno that those works that do not offer profitability, but are socially necessary, are financed directly by the State of Chile. . «Ordinary and small public works - such as the maintenance of secondary roads, minor buildings or basic medical care centers, police stations or courts - are carried out by the State. A tender is made and the lowest bid is awarded to contractors controlled by the Ministry of Public Works. These works are financed directly by the State," he explained.
A good example of the Chilean model of incorporating private capital into public works is the construction of prisons.
In Chile, 85% of the investment in infrastructure is borne by the State, while the other 15% is contributed by the private sector and of that 15%, only 8% is at risk. The other half has assured repayment.
The State imposes the conditions of capacity, food, and hygiene of the inmates. Whoever wins the construction bid, that is, a private party, is left with the administration of the prison. The payment system is per inmate and per day. Regarding the construction contract, the project is delivered as a guarantee to the banks that finance it.
In the Chamber of Construction, they highlighted macroeconomic organization and legal security as an indispensable condition to advance in a similar system. "Chile has a very good dispute resolution system, which allows world-class companies to finance works," they explained to LPO. .
On the other side of the library, Marco Enríquez Ominami, former candidate for president of Chile, maintains that the model does not work very well in his country and raises some questions. Among them the extra price charged to users. Ominami said that Chileans could go into debt up to 50 times due to non-payment of a basic service until they ended up paying USD 30,000 for not paying the toll on a road corridor. |
