President Nestor Kirchner on Friday signed an emergency decree raising the national government's budget spending for this year by 14.2 billion pesos (4.4 billion dollars), up 12% over the original budget.
The increase, to be financed through tax revenues and new debt issues, will focus primarily on public works, energy and transport projects, with some 6.8 billion pesos going to the Planning Ministry, headed by widely questioned Kirchner confidant Julio de Vido. T
he sharp rise in spending in the run-up to the October presidential elections is permitted by the so-called 'superpowers' enjoyed by the executive, which allow for budget changes without congressional authorisation.
The announcement coincided with the release of industrial output figures for July, which showed a year-on-year increase of only 2.7% -- in comparison with a 6.4% rise in the first half of the year -- and a month-on-month fall of 2.1%, as a result of restrictions on electricity supply to industry.
Steel production fell by 26.2% year-on-year. Although GDP growth will remain strong this year, failure to resolve bottlenecks such as capacity constraints and energy supply will lead to a continuing decline that will raise questions over the sustainability of both public spending and debt servicing.