Allende & Brea – Estudio Jurídico

Keys to Understanding the State Reform Approved by Decree No. 70/2023

The Decree of Necessity and Urgency No. 70/2023 issued by the President of the Nation in the General Agreement of Ministers (the “Decree”), among other measures, has enacted significant changes in emergency, state reform, and deregulation.

The main aspects contained in the Decree are:

  1. Economic Emerency. A public emergency has been declared in economic, financial, fiscal, administrative, pension, tariff, health, and social matters until December 31, 2025. The measures that this emergency will entail are likely to be announced in the coming days. However, it’s a declaration that covers 8 essential aspects in which state regulation intervenes, so it is foreseeable that this declaration will affect matters related to payments, contracting, and contractual renegotiations in the indicated issues.
  2. Deregulation. The Decree provides for extensive trade, services, and industry deregulation throughout the national territory to promote an economic system based on free competition, private property, and the free movement of goods, services, and labor. Deregulation implies that all restrictions on the supply of goods and services are invalid, along with any normative requirement that distorts market prices, prevents private free initiative, or avoids the spontaneous interaction of supply and demand. However, this measure will become operational when regulations specify the necessary timelines and instruments to make it effective.
  3. State Reform. The reforms made about the organizational structure of the Public Administration focus on (i) the repeal of various State business forms, (ii) the abolition of the national purchase regime, (iii) the transformation of government business entities into corporations, and (iv) privatization.

The Decree repeals the State Companies Law (No. 20705), the Mixed Economy Companies Decree (Decree Law No. 15349/46), and the State Enterprises Law (Law No. 13653). Some of these entities were outdated and not highly operational, except for State Companies, which was used until recently, such as when Military Manufactures adopted this form.

Additionally, under this section, the Decree abated the first legal regimen for purchasing national assets (Law No. 18875). In the deregulation chapter, the Decree repealed the so-called Buy Argentine and Suppliers’ Development Law (Law No. 27437), likely resulting in simplified proceedings for selecting state contractors and increased competition. However, measures will need to be taken to clarify the scope of these reforms concerning contracts currently under execution.

The Decree also modifies some provisions of Law No. 23696 concerning the Employee Ownership Program and the manner of declaring that an entity is subject to privatization.

As another significant and necessary paradigm shift, the Decree orders that all state business entities (whatever their form and denomination) be transformed into commercial companies and provides for a maximum transition period of 180 days for the Implementing Authority to proceed with the registration of the transformed companies in the Public Registry of Commerce.

Furthermore, the Decree clarifies that companies in which the National State is a shareholder will not enjoy any prerogative of public law, nor will the National State be able to arrange advantages in contracting or in the purchase of goods and services, nor prioritize or grant benefits of any type, reach, or character in any legal relationship in which it intervenes. In this way, free competition among the various state suppliers is guaranteed, regardless of whether the service can be provided or contracted by a state-owned entity.

This report cannot be considered as legal or any other kind of advice by Allende & Brea. For any questions, do not hesitate to contact us.

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