Well, Argentina is the second biggest Country in South America, and one of the biggers in America, by definition they need to impose themselves , and having a decent military Industrial park(wich they have,but is in foreing hands unfortunately) is one point.
the problem is that unfortunately Argentina last governments 2002-today cracked down the country IMO, the people gone too much liberalist and external multinational(even some neighbors companies) companies took over the local industries, Including their Military Industries.
Argentina had for decades(and still havin, i guess) the biggest suth america HDI(Human Development Index) wich is one of the points to show how big and developed Argentina is.
So, IMO there is no excuse to such of people in don't having money for it, its just ''MilitaryPhobia'' wich many of South America Countries have/had after the ditactorship time.
To the 90's to Early 2000s +- we had the same problem, we also denied an almost free gift from USA that were about 60 F-16(A but with option to modernize)+ 4 OHP + a bunch of M1A1s + thousand of hummvees + a great weapons package, but it was denied by government, many say here , fearing an posible back to power by military(and man, i'm talkning about our economical prosperity time!!!), just to ilustrate how stupid it used to be here.
I don't really conccur also with the Military request is made in a external enemy demmand.
now the Relations with Chile are calm, but it was never this way, right before the Falklands war , they got a huge problem with chile, AFAIK there was some bullets flying around but fortunately it didn't turn in to a war.
So,for what it seems they have more to worry about than Medical Care, safety and Public Schools.
and remembering that one of biggest Industries in the world is the defense one, investing on that they wouldn't only get armed, but they would develop the region around injecting money in the economy, its pretty the same of what the federal government wants to do here with all those defense contracts.
Just my 2 cents.