The public investment executed by the National Administration in 2021 amounted to $1,108,623 million, with a nominal increase of 275% and 148.5% in real terms, while reaching its highest level in the last five years, with a participation of 2.4% of the Gross Domestic Product (GDP), according to a report prepared by the Congressional Budget Office (OPC).
Housing and urban planning, Transportation, Drinking water and sewage, and Energy were the four main items, explaining 75.8% of total investment.
The growth of public investment, as well as its geographical distribution throughout the country, was highlighted by the President of the Argentine Chamber of Construction (Camarco), Gustavo Weisswho pointed out the “clear and frank intention of the Government” to prioritize it.
“Clearly, this is the result of a government policy that gives rise to this substantial increase”remarked in statements to Télam Weiss, who compared the management of President Alberto Fernández with that of his predecessor, Mauricio Macri, in light of the 2018 financial crisis which, in his opinion, “marked a before and after” .
The internal sources of financing exhibited a growth of 202.7%, while the external ones fell 6.7%.
In this regard, he pointed out that “in 2017 the level of public investment had been very important, but in 2018 and 2019 it decreased drastically.”
The devaluation process that began in April 2018 and the closure of the capital markets was a turning point in the financing modalities of public investment.
In this regard, the OPC indicated that the internal sources of financing exhibited a growth of 202.7%, while the external ones fell 6.7%.
That determined that 90.3% of the financing of investment spending corresponded to internal sources ($1,000,757 million) and the remaining 9.7% to external sources ($107,866).
Within internal sources, 48.6% corresponded to resources from the National Treasury and 47.2% to internal credit.
For its part, 56.2% of external sources came from the Inter-American Development Bank (IDB), 14.5% from the World Bank, 13.1% from the China Development Bank and 9.8% from the Andean Development Corporation (CAF).
After the impact of the outbreak of the coronavirus pandemic in 2020, last year marked a rebound in public investment, reflected in the fact that it went from a share of 1.1% to 2.4% of GDP.
Iván Szczech, Weiss’s predecessor in the presidency of Camarco and member of the Economic and Social Council, agreed in highlighting the importance of the increase in public investment and considered “essential that it be further deepened in 2022 and in the future, so that the country can grow at a rate of between 3 and 4% per year”.
Within internal sources, 48.6% corresponded to resources from the National Treasury and 47.2% to internal credit.
“The current negotiation with the Monetary Fund must privilege this investment and not reduce it as a step in the 2018 agreement with the result that we all already know,” Szczech emphasized in statements to Télam.
In the annual growth of public investment, Capital Transfers (TC) had an outstanding performance, with $859,259 million and an increase in real terms (deflated by inflation of 50.9% in 2021) of 187.4% (333, 7% nominal).
This increase was higher than that of the other component, Direct Real Investment (IRD), which with $249,364 million had a real increase of 69.5% and a nominal increase of 155.8%.
Regarding the participation of each component with respect to GDP, the IRD went from 0.4% in 2020 to 0.5% in 2021, while in the same period the TC rose from 0.7% to 1.9% .
Weiss considered that the greater growth of the TC over the IRD was due to the fact that “one of the things that the government is doing is transferring resources directly to the jurisdictions to decentralize the execution and make it faster, instead of leaving it in the hands of the central government”, so that it is “the provinces and also the municipalities that take charge of this task”.
In the same sense, Szczech highlighted that “what has been done throughout the country are works that are executed federally, in more than 3,000 municipalities.”
Thus, he added, it was achieved that “the construction industry is the one that created the largest amount of private employment, with 75,000 direct jobs in 2021 and 100,000 if we take from July 2020”.
Among the recipients of transfers, trust funds and other entities ($333,828 million) were in first place, with a year-on-year growth of 649.4% and a share of 38.8% of the total TC.
It was achieved that “the construction industry is the one that created the largest amount of private employment, with 75,000 direct jobs in 2021 and 100,000 if we take from July 2020”.
In second place were the public companies ($262,526 million) with an increase of 95.1% compared to 2020 and a participation of 30.5%, and then the provinces and municipalities ($215,541 million), which grew 150.2% in a year and represented 25.1% of the total.
The budget execution in investment projects corresponded to 673 works and 20 of them, mainly related to the construction of highways and highways in charge of the National Highway Administration, concentrated half of the accrued in this concept.
The main ones were the construction of the second lane of the Pilar-Pergamino section of National Route 8 ($11,759 million), the Presidente Juan Domingo Perón highway ($9,648 million), the renovation of the Belgrano Cargas Railroad tracks ($8,585 million) and the construction of the second lane of the Rosario-Sunchales section of National Route 34 ($6,671 million).
Lastly, the rate of monthly execution of public investment accelerated in the last two months of the year and concentrated in that period half of the annual accrual.
