On July 8, 2024, Regulatory Decree 592/2024 (the “Decree“) regulating Law 27,742 Bases and Starting Points for the Freedom of Argentines (the “Law” or “Bases Law“) was published in the Official Gazette, which in Title I and II, introduces modifications in administrative matters.
The following is a summary of the most important amendments introduced by Titles I and II of the Bases Act.
Declaration of Emergency and Delegation of Powers
The new Basic Law declares an emergency in several areas, delegates legislative functions to the Executive Branch, promotes the reorganization of the National Public Sector and authorizes privatizations, among other measures.
1. Declaration of Emergency:
- A public emergency is declared in the administrative, economic, financial and energy areas for one year.
- This declaration supports the delegation of powers to the Executive Branch, pursuant to Article 76 of the National Constitution.
2. Delegation of Powers:
- The Executive Branch is granted powers to:
- Improve the efficiency of the State, achieving a transparent, fast, efficient and quality public management.
- Reduce the oversizing of the state structure to reduce the deficit, make spending more transparent and balance the public accounts.
- Ensure effective internal control in the National Public Administration to guarantee transparency in the administration of public finances.
- The Executive Branch must report monthly to Congress on the use of these powers and the results obtained.
- All decrees issued under these powers shall be subject to subsequent legislative review, pursuant to Article 100 paragraph 12 of the National Constitution and Law 26122.
Reorganization of the National Public Sector
The Basic Law promotes the reorganization of the National Public Sector in the context of the declared emergency.
1. Powers of the Executive Branch:
- To modify or eliminate competencies, functions or responsibilities of the central administration and of decentralized agencies created by law.
- To reorganize, modify or transform the legal structure of these agencies, centralize, merge, dissolve or transfer them to the provinces or to the City of Buenos Aires.
- To modify, transform, merge, merge, spin off, reorganize, reconform or transfer to the provinces or the City of Buenos Aires companies and corporations under state control.
- Authorize the intervention of decentralized agencies and state-owned companies and corporations for one year.
2. Restrictions:
- These powers shall not apply to national universities, bodies of the Judiciary, the Legislature, the Public Ministry and other specific agencies such as ANMAT, CNV, UIF and ENACOM.
- Modify, transform, unify, dissolve or liquidate public trust funds.
- To declare “subject to privatization” eight state-owned companies and corporations, according to the terms of Law 23696 of State Reform. Among them, the Carboniferous, Railway, Port and Energy Complex in charge of Yacimientos Carboníferos Río Turbio (YCRT) is declared subject to privatization. Privatization will include the possibility of:
- Organize a joint ownership program.
- Incorporate private capital while maintaining state control or majority participation in the capital stock.
During the liquidation of state-owned enterprises, the following provisions must be complied with:
- Only the assets necessary to cancel liabilities may be sold.
- In case of insufficient assets, the Agencia de Administración de Bienes del Estado will be required to dispose of the remaining assets.
The privatization process must be carried out with transparency, competition, maximum concurrence, open government, efficiency and effectiveness in the use of resources. The regulations will establish specific terms and modalities to guarantee due publicity and dissemination.
Amendments to Laws and Contracts
1. Administrative Procedures Law:
- The Bases Law introduces extensive amendments to the Administrative Procedures Law, incorporating modern principles and doctrines to strengthen the guarantees of citizens vis-à-vis the Public Administration.
2. Renegotiation of Contracts:
- The Executive Branch is authorized to renegotiate or terminate contracts for public works, concessions, construction or provision of goods and services exceeding certain amounts and entered into before December 10, 2023.
- It is considered inappropriate to suspend or terminate public works contracts 80% executed or with international financing, allowing their resumption by means of an agreement between the principal and the contractor.
3. Exclusions and Disputes:
- Contracts signed during the privatization of the 1990’s and those signed under promotional regimes are excluded from renegotiation or termination.
- The Executive Power is empowered to enter into transactional agreements in case of controversies or breach of contract, with the intervention of the Procuración del Tesoro de la Nación and the Sindicatura General de la Nación.
4. Public Works Concession Law:
- Amendments are introduced to provide greater flexibility, legal certainty and stability.
The Law became effective with its publication in the Official Gazette on July 8, 2024.to contracts under this regime.
