Argentina's government on Thursday vetoed a measure that would have capped increases in gas, electricity and water rates that have ignited protests against President Mauricio Macri.
The bill's goal was to bring back subsidies on utilities and return rates to the levels of November 2017. It was approved in the Senate early Thursday by a 37-30 vote.
Cabinet Chief Marcos Pena called the law "irresponsible," and said that it was vetoed because it doesn't respect the constitution, since lawmakers cannot set rates. In a press conference, Macri later said that the law effectively would have blocked payments for infrastructure and other projects.
"It would mean suspending ... disability payments, pensions for retirees, or suspending works nationwide that provide drinking water, sewage ... improvements on the airport so we can get more tourists, or energy," Macri said.
"I'm the first one who doesn't want to hike (utilities). I wouldn't if we didn't need to. ... I'd like to wave a magic wand and make money appear."
Since taking office in 2015, Macri has imposed a series of austerity measures aimed at slashing the fiscal deficit. But he has faced large protests after eliminating subsidies on utility rates.
Many of the votes for the measure came from lawmakers aligned with former President Cristina Fernandez, a Macri rival who is now a senator. During her 2007-2015 administration, Fernandez kept energy cheap through subsidies even at times of spiraling consumer prices.
Opposition lawmakers contend that the law was vital to help Argentines who have been losing purchasing power due to one of the world's highest inflation rates.
Political analysts say that Macri decided to absorb the political cost of vetoing the bill because he needs to show investors that he will carry on with measures aimed at strengthening Argentina's economy.'
The conservative leader announced earlier this month that he was starting talks with the International Monetary Fund on getting a credit line to finance his government following a sharp devaluation of Argentina's peso. The decision unsettled Argentines because many blame the IMF for introducing policies that led to the country's worst economic crisis in 2001.
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