The adjustment of President Javier Milei and the Minister of Economy, Luis Caputo, does not stop, as revealed in a report from the Congressional Budget Office (OPC). The document indicates that In the first seven months of the year, sensitive items such as pensions, transfers to universities, family allowances, social programs (Potenciar, Food Policies, Progresar Scholarships), and public workers’ salaries fell in real terms.among others.
Not only is spending falling, but tax revenue has also been affected by the decline in economic activity. According to OPC, between January and July of this year, income shrank by 2.7% in real terms, and Social Security resources fell by 16.4% due to the reduction in employment and the fall in real wages.
Thorough cuts
One of the most disadvantaged sectors is that of retirees. According to OPC, when comparing the Purchasing power of retirement pensions Seven-month average of 2024 compared to the same period of 2023 prevails a real drop of 29.2%; meanwhile, minimum wages (with bonuses) lost 18.5%.
Compared to December 2023, retirement benefits higher than the minimum showed a recovery of 9.2% in real terms (although they do not recover what was lost in recent years) while Minimum wages (with bonuses) fell 4.9% in real terms, due to the impact of bonuses, which have remained without increases since Marchaccording to the report.
EThe Government also adjusted in the first seven months of the year energy subsidies (-37.4% in real terms), transport subsidies (-38% in real terms), which implies an increase in the rates for electricity, gas, buses, and trains that impacts the pockets of the working class, while the companies that operate these services continue to profit.
Social programs were cut. Thus, between January and July of this year decreased in real terms in relation to 2023 the Potenciar Program (58.6%), Food Policies (-18%) and Progresar Scholarships (-62.7%) items. In the same period The Government adjusted transfers to the provinces (-83.5%)which is mainly explained by the reduction of the National Teacher Incentive Fund (FONID) and the decrease in transfers to school cafeterias; and Transfers to universities (-31%)which is the result of the cut in funds for teaching and non-teaching salaries and financial assistance to University Hospitals.
Meanwhile, the state workers were another sector affected by this Government. Milei took advantage of the precariousness of work left by previous governments and fired public employees, as well as cut salaries. The departure of Personnel expenditure fell by 17.4% in real terms in the first seven months of the year compared to 2023.
The measures taken by Milei and Caputo to devalue, adjust, and increase public service rates led to a decline in economic activity and a recession. This led to the closure of companies, layoffs, and a general decline in consumption. The recession has an impact on lower revenue collection and, therefore, it is possible that the government’s goal of deficit reduction will not be met. This may lead to a Greek situation of permanent adjustment that never ends up solving the problem of the fiscal deficit, and may even aggravate it, requiring new stages of cuts in public spending.
Since the IMF returned to Argentina under Mauricio Macri in 2018, poverty has doubled. Caputo is desperately seeking a new negotiation with the organization, but it will lead us to the same old story: sinking into the deep end. We must reject the ongoing adjustment, the agreement with the IMF and mobilize for the sovereign’s rejection of the debt.
Source: www.laizquierdadiario.com
