Argentina's Macri to enact IMF-imposed cuts by decree, circumventing Congress
Amid a deepening recession and foreign debt crisis, Argentine President Mauricio Macri has, according to documents leaked from the Economy Ministry, committed to budget cuts of nearly $10 billion.
The cuts - around 8% of next year's proyected federal budget - had first been unofficially reported on June 8, the day Macri signed an agreement with the IMF for a $50 billion stand-by credit line.
The IMF-backed program has since been enacted solely by decree, starting with federal payroll cuts of around $1 billion - which led to the military's refusal to participate in the Independence Day parade.
But according to documents obtained by the progressive online daily El Destape, a full third of the cuts will be in federal public works spending, which the Economy Ministry pledged to cut by $3.3 billion - a whopping 81% in real terms.
Other federal cuts - including a freeze on AUH benefits for poor children (amid 40% inflation) - will make up another third.
Economy Minister Nicolás Dujovne also suggested today that 3.5 million "non-contributory" pensions (around half the total) could be eliminated outright. If enacted, this would double budget cuts to $20 billion - but would affect the poorest seniors.
A new federalism
The remaining one third will result from reduced transfers to the nation's 23 provinces.
These revenue sharing cuts include shifting $1.7 billion in pensions and $1 billion in social assistance costs to already cash-strapped provinces, as well as cuts of up to 50% in transport, education, housing, and health subsidies - including vaccines.
Provinces will lose another $1.1 billion by the rescission of the Federal Solidarity Fund (FFS), which though only 1% of their combined budgets, was a boon to municipalities (particularly smaller ones) as they automatically received 30%.
Like the payroll cuts in July, the FFS was eliminated yesterday by decree - a day after an IMF delegation arrived in Buenos Aires to monitor the June 8 agreement.
The agreement has prompted protests from opposition parties.
They note that besides overriding Congress' budgetary authority, the terms do little to curb a record $31 billion current account deficit (nearly 5% of GDP).
Current account deficits doubled after Macri - with IMF support - liberalized imports and finance, leading to record trade deficits and capital flight.
The nation's public debt has ballooned under Macri from $223 billion (38% of GDP) to $368 billion (87% of GDP), leading Bloomberg on Monday to position Argentina as the second-most vulnerable to default among emerging economies.
The Argentine economy, which grew 2.9% last year, has meanwhile fallen 5.8% just as of May.
This would be the 2nd recession since Macri took office.
At: https://translate.google.com/translate?sl=auto&tl=en&js=y&prev=_t&hl=en&ie=UTF-8&u=https%3A%2F%2Fwww.eldestapeweb.com%2Fexclusivo-los-documentos-que-firmo-el-gobierno-el-fmi-ajustar-294-mil-millones-bajan-jubilaciones-y-auh-n47742&edit-text=
Fourteen of the nation's 23 governors gather in Buenos Aires to discuss Macri decrees cutting revenue sharing programs - a key point given that over 40% of provincial budgets are federally funded.
