After days of protests and violent confrontations between bill-opposing mobs and police, Argentina’s Congress passed a pension reform Tuesday.
The maneuver will change the benefit calculation formula as the measure is central to President Mauricio Macri’s fiscal deficit slashing and investment attraction plan. Rather than keep benefits in line with tax income and wage hikes, they will instead be linked to consumer prices. In addition to lower inflation expectations, Reuters reports that economists have said this method will make fiscal deficit slashing easier.
After an all-night session, the bill passed the lower chamber of deputies by a 128-116 vote, with two abstentions. The bill was approved by the Senate last month.
“This formula guarantees that over the next few years, retirees will never lose against a jump in inflation,” Macri told Reuters. “All these changes generate discomfort, but they are necessary.”
The government will now continue with congressional votes on a tax code reform as well as a plan aimed at limiting provincial spending.
Macri also promised a one-time bonus payment to impoverished retirees. In addition, the government said pensions would increase by 5% above inflation next year.
In 2018, Argentina is looking to cut its primary budget deficit from 2017’s 4.2% gross domestic product to 3.2%. Next year, the government is expected to save 61 billion pesos ($3.49 billion), although those savings could be reduced by 4 billion pesos ($227 million), according to Buenos Aires consultancy Elypsis.
The bill was highly criticized by the Argentinian public, with violent protests that saw enraged citizens throwing stones at police Monday, to which the authorities responded with tear gas and water cannons. Argentina’s main union performed demonstrations as well, holding a 24-hour general strike. According to state-run news agency Telam, dozens were injured and 60 people were detained in what the agency is calling one of the South American country’s most violent protests in years.