President Javier Milei signed the May Pact together with Tucumán Governor Osvaldo Jaldo and 17 other governors.

In Tucumán, late on Monday night, Milei signed, along with 18 governors, the May Pactwhich includes among the points the “non-negotiable fiscal balance” y “public spending around 25 points of GDP”The chainsaw was applauded by the IMF, but the Fund suggested “improving the quality of fiscal adjustment.”

What the agreement signed in July does not say is who is responsible for the reduction in spending, that is, the adjustment. According to the Congressional Budget Office, The cuts were in retirement and pensions, public workers’ salaries, student scholarshipsamong others in the first half of the year. This pact endorsed by governors, even with a sector of Peronism, promises more chainsaw.

Milei wants to reorganize the country in the image and likeness of the wishes of imperialist financial capital, but he comes up against more limits. But there is another way out, the working class can organize a serious resistance, and intervene to reorganize the economy based on the needs of the working people.

Five numbers of adjustment

The Congressional Budget Office (CBO) report noted that the National Administration revenues fell 3.6% in real terms in the first half of the year compared to the same period in 2023. Due to the recession, state revenues fellthere was a drop in Social Security Contributions (-18.0% YoY), VAT (-8.7% YoY) and Income Tax (-6.0% YoY). On the other hand, there was an increase in taxes related to foreign trade (+10.3% YoY) and the PAIS Tax (+414.7% YoY), the latter being the one that the IMF wants to be eliminated for imports.

Meanwhile, the report warns that Total expenses fell by 29.0% in real terms in the first six months of the year compared to 2023. “Around a third of this reduction was explained by the drop in retirements and pensions”warns OPC.

  • Retirements: : 23.5% drop in real terms in the first half of the year compared to 2023. The purchasing power of the average pension fell 30.1% YoY in the first half of the year, a loss that is reduced to 19.0% YoY in the case of pensions supplemented with a bonus, says OPC.
  • State workers: Personnel spending fell by 16.4% in real terms between January and June of this year. The report indicates that wages were below inflation, meaning that public sector workers lost purchasing power. In addition, the Government has laid off precarious workers since taking office.
  • Social programs (Food, Accompany): 39.5% cut in the first half of the year. The Government adjusted Food Policies (-17.9% YoY real), Food Benefit (-13.1% YoY real). The report warns that “there were almost no transfers to community canteens and snack bars (-99.1% YoY real). Milei also adjusted Potenciar Trabajo (mainly explained by the loss of purchasing power of the benefits, explains OPC), Becas Progresar, (-60.2% YoY real); and Programa Acompañar, (-81.6% YoY real). This last cut came hand in hand with the dismissal of 80% of the workers of the former Ministry of Women.
  • Universidad: 30.8% drop in the first half of the year. The document indicates adjustments in funds for the payment of salaries of teaching staff and senior authorities, (-30.6% YoY real), salaries of non-teaching staff, (-27.0% YoY real), Financial Assistance for University Operations, and Financial Assistance to University Hospitals, (-23.5% YoY real).
  • Provinces: 81.9% cut between January and June 2024 in real terms compared to 2023 explained by cuts in the National Teacher Incentive Fund (FONID), and transfers to school canteens, among others.
  • Subsidies: 39.9% adjustment in the first six months of the year, thus cutting subsidies for energy and transport, which implied an increase in electricity and gas rates and public transport. The Government promised the IMF that there will be more increases in energy rates (electricity and gas), public transport (buses and trains) and water in the remainder of the year. Public services must stop being a business because they are an essential right of the working people.

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