As expressed by the Argentine Chamber of Construction (Camarco), currently the Nation, the provinces and the municipalities slow down the processing and payment of public works certificates with their respective redeterminations of costs, which generates a strong impact on the works and jeopardizes both the works and the to the companies.
This situation was exposed during a recent meeting of businessmen in the field, where it was warned that it is a general, systemic problem that occurs in all companies in the sector, whether they are SMEs, medium-sized, and large, and that the national government must urgently address. The delicate situation warranted an open complaint from Camarco: the delay in payments affects everyone equally.
During the meeting, which took place virtually and in person, Camarco’s partners reported the “terrible consequences” that these problems cause to the firms. “Delays in payments always generate enormous damage, a situation that is aggravated in a context of high inflation. In addition, this delay is not compensated due to non-payment of interest established by the Public Works Law “they maintained.
In addition, they remarked that another complex scenario is added to this panorama, product of the inefficiency of the price redetermination scheme in a context of high inflation, which makes the works absolutely impractical.
Among the immediate consequences, a strong impact on employment was warned, which can generate layoffs or suspensions; the paralysis of the works in progress, and the affectation of the continuity of the companies and the value chain of the industry.
A methodology that does not work with inflation
As is known, public works go through a process of presentation, bidding (price verification) and adjudication, where the total budgeted amount is approved. But according to a Mauricio Macri decree, when inflation exceeds 5%, a mechanism is activated by which the redetermination of the prices of the work is set in motion. In times of low inflation, one or two a year were generated, but today multiple monthly updates are neededand even, there are those who ask that they be daily.
The redeterminations are calculated on past months, after knowing the inflation rates and other INDEC variables, and not on the current month or days of the month, which causes the costs of the works to be delayed. This mismatch harms the finances of construction companies, which in many cases are forced to finance projects with their own funds, waiting for a promise of compensation that is always late.
At the same time, there are significant delays in obtaining the redetermination by the National Stadium, in particular, by the Ministry of Public Works, in charge of Gabriel Katopodis. According to the businessmen affected, once the application is submitted, it takes a few 60 days to respond, which produces a “delay of the delay”.
Until recently, companies generally calculated an additional financial cost of the 2% of the total work, equivalent to the days out of date, with outdated prices. Today that percentage climbed to 10%which in many cases makes the continuity of the projects unfeasible, or the start of new ventures.
Within this framework, the president of Camarco, Gustavo Weiss, stressed that the work with international financing they are “practically up to date”, but pointed out that as the budget of the projects depends on ever lower levels of the State, payments can be delayed up to nine months. “The works linked to the World Bank and the IDB are quite up to date, but the works by agreement of the national government with the provinces or municipalities have more significant delays,” he said.
According to Weiss, today hundreds of public works are under construction throughout the country, which due to the current levels of inflation -of more than 100% per year- are “difficult” plans to carry out. “Public works contracts have a price update system, with a polynomial formula with INDEC indices designed post-convertibility, to keep the values of the signed contracts constant, but it deteriorates with these levels of inflation”alerted.
Within this framework, the managers of Carmarco demanded from the national and provincial authorities an “urgent normalization” of the payment scheme and redetermination of prices and warned that, if the current situation persists, the high impact on employment and the stoppage of works it will be “inevitable”.
Source: Ambito
