The economic situation is critical, the economy slows down and the inflation still at high levels. Last Friday, INDEC published that the economic activity in April showed a fall of 4.2% in relation to the same month last year. According to the Government, the collapse in April reflects the impact of the drought with a sharp drop in the agricultural sector. By 2023, the Latin Focus Consensus Forecast report, made on the projections of more than 50 economic consultants and banks, anticipates that the economy will contract 2.4% in 2023 and inflation will be 134.9% this year.
In this context there is a serious social situation with greater inequality and a deepening of the deterioration of purchasing power. This is the scenario in which the presidential elections will take place, where the main candidates supported by the owners of the country agree to keep the Fund in these pampas, pay the debt, an extractivist agenda, more adjustment and devalue. They are old anti-worker recipes. Only the left proposes a way out in favor of the working class.
Fit: plus scissors
“Fiscal anchor”, “fiscal order” were the words used Hernan Lacunza (Economic benchmark for Horacio Larreta) and Sergio Massa at business meetings. Euphemisms to avoid using the word fit.
Lacunza participated last week in the 40th Congress of the Argentine Institute of Finance Executives (IAEF) where he argued that inflation could drop when “when the Treasury stops being an insatiable demander of pesos and dollars from the Central Bank”, and in that way the “fiscal anchor is the first step, that is, stop spending more than what is collected”. Behind Lacunza’s recipe is the position of the Central Bank’s issuance of banknotes as the sole cause of the price rise. There is talk of cutting spending, but does not intend to attack the regressive tax system and raise taxes on big business to increase revenue.
Javier Miley He spoke before the same IAEF Congress and maintained that “the Fund is not going to have a problem with us because the adjustment of the Fund seems light to us.” According to the “libertarian” candidate, the adjustment will be charged to politics, but as revealed a document that with the central axes of its government plan its policies are to privatize education, health, reduce spending on retirement and pensions, fire state workers, to mention a few points. That is, the adjustment will be against the working people.
Meanwhile, Sergio Massa, candidate for Unión por la Patria and Minister of Economy, participated in the Annual Convention of the Argentine Chamber of Construction (Camarco) and affirmed that one of the “four pillars that must guide us is the fiscal order , the trade surplus, exchange competitiveness and development with inclusion”. The minister complies with the fiscal order as he likes the Fund, thus he has had eleven consecutive months of real monthly falls in primary spending, including cuts in pensions, universities and the Universal Child Allowance.
dollar and devaluation
Another relevant issue is what to do with the dollar. Lacunza maintained that “the stocks cannot be lifted in days” and added that “the removal of the stocks would be a success if it were done in the first year, but it would be sequential, where trade restrictions would be relaxed first, then the debt and lastly to the repatriation of dividends”. When it comes to lifting the stocks the word devaluation is omitted, but it is what will happen when it is carried out as it happened during the Macri government. A jump in the exchange rate impacts on a price rise and therefore it deteriorates purchasing power. Larreta’s space economist differs from the proposal of Patricia Bullrich, who says that he will remove the stocks in the first days of management. The debate is “gradual” or “shock” devaluation. For his part, Javier Milei made a lot of propaganda with his dollarization proposal, which, as analyzed in this medium, implies a mega-devaluation that will destroy wages even more.
Sergio Massa denies a devaluation, his double disguise as minister and candidate prevent him from talking about a jump in the exchange rate that would accelerate inflation and worsen the current economic situation even though It is part of the menu requested by the Fund to avoid squandering their dollars to contain currency runs.
Argentina in the Background
Regarding the IMF, the main candidates agree to renegotiate with the organization and pay the debt. Lacunza stated at the IAEF congress that “with a plan it will be possible to pay on time.” Massa, still without receiving the disbursement from the Fund and with almost no dollars in the reserves, made a million-dollar payment to the agency last Friday and maintained before the construction businessmen that “the obsession that the next president must have is to gather all the dollars that Argentina needs to pay the IMF”.
Nor should we forget the help of Juan Grabois in the approval of the agreement with the IMF in Congress. As Myriam Bregman, presidential candidate for the PTS in the Left Front, affirmed, the deputies of Grabois (presidential candidate for Unión por la Patria) have a privileged seat in the Budget Committee and without their vote the agreement with the IMF would not have been reached. voted.
The extractivist agenda is present in the recipe of the main candidates. The Minister of Economy stressed that it is necessary to look at “the mountain range as if it were a cake” and spoke about the development of lithium, gold, copper, and other minerals. The reform of the Jujuy Provincial Constitution by Gerardo Morales with repression to allow lithium mining to advance is another example, the radical is Larreta’s vice-presidential candidate. Economic development, new investments and the income of dollars are promised without considering the looting and socio-environmental destruction.
Salaries that are not enough
The bosses’ parties do not offer an answer to improve the living conditions of the popular majorities. INDEC recently published data on wages and income distribution that show that assets lost against inflation of 8.4% in April, and the distribution of the pie is unequal.
The real wage expresses the purchasing power of labor income after comparing its evolution in relation to inflation. According to INDEC, in the first four-month period of the year, the real salary of the group of workers fell 2.1%. In the same period, registered private workers (-2.3%), registered public workers (-1%), and unregistered workers (-3.7%) lost. During the Frente de Todos government, all sectors also lost (private: -1.4%; public: -0.8%), with a greater drop for informal workers (-22.2%). The decline is greater than 23% compared to 2015.
There is a lot of month left over at the end of the salary. In the first quarter of the year, half of the workers received less than $100,000 when the minimum consumption basket prepared by the Internal Board of Ate Indec was $274,162 in the same period. Said basket is not an ideal or optimum, but it is close to what is needed to make ends meet.
Meanwhile, INDEC published that the gini coefficient (it is an indicator of inequality: in the extreme, if the indicator turns out to be zero it means absolute equality and if it turns out to be one it implies absolute inequality) of the per capita family income of the people was 0.446 for the first quarter of 2023 while in the same quarter of 2022 was 0.430, which shows an increase in inequality in the year-on-year comparison. It is the highest value since the first quarter of 2021 when the economy was affected by the pandemic and higher than the levels reached in 2018 when Macri signed the agreement with the IMF.
These data reveal a certain logic of the capitalist system, In each recovery after a crisis, the poor population, the workers, are not able to recover what they lost at the worst moment of that crisis. During the government of the Frente de Todos, the looting of macrismo was not reversed, but rather the social deterioration deepened.
The stale bosses recipes will not mean an improvement for the working class. The struggle of the people of Jujuy against the reform, for rights, and wages shows that another way out against the adjustment plans is possible. only the left front proposes a way out of another class to stop looting with measures such as reducing the working day to 6 hours a day and the distribution of working hours in large companies, rejecting the agreement with the IMF, sovereign ignorance of the debt, among other measures to reorganize the economy in favor of the interests of the vast majority, favoring a harmonious relationship with the environment.