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News > Latin America

Argentine Pro-IMF 2019 Budget Up for Senate Debate

  • A store goes out of business in Buenos Aires, Argentina May 17, 2018. The country's 2019 budget that proposes heavy social spending cuts, goes to the Senate

    A store goes out of business in Buenos Aires, Argentina May 17, 2018. The country's 2019 budget that proposes heavy social spending cuts, goes to the Senate | Photo: Reuters

Published 14 November 2018

Argentine economist Martin Kalos tells teleSUR the proposed 2019 budget cuts education and housing spending while maintaining loan interest to IMF.

The Argentine Senate is set to begin debating the 2019 national budget on Wednesday afternoon that will codify spending cuts to education, housing, and the arts and feed interest on the country’s US$56.3 billion IMF (International Monetary Fund) loan.  

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Senators are set to begin the debate around 2:00 p.m. local time on a budget that citizens have been protesting for weeks since it passed in the House of Representatives in late October. Organizations and professors, including Carlos Kalos, economist and professor at the University of Sarmiento, say the budget harms the country’s millions of vulnerable citizens by slashing education, housing, and infrastructure funding in order to fulfill IMF loan conditions.  

In his interview with teleSUR, Kalos said that the 2019 budget has some of the biggest cuts to social spending in years. He said the only spending that keeps pace with the next year’s expected 35 percent inflation rate are expenditures for interest“ on the IMF loan debt.

“For example, education spending goes up 21 percent, and housing, by 12 percent, which amounts to a 23 percent cut” in the latter if accounting for projected inflation, explains Kalos. He says this is a “requisite for the IMF bailout” loan that Macri took out after his administration sold off millions in U.S. dollar reserves and Argentine pesos hoping these tactics would stop the 50 percent peso devaluation that started last May and currently sits at 40 pesos to the U.S. dollar.  

Kalos added, “other expenditures,” such as arts, science, and education, “don’t matter to the (IMF).” In its latest Argentina report, IMF leaders said the country should also do away with “inefficient energy subsidies,” that Macri has cut by up to 1000 percent in some parts of the country over the past year.

Appeasing the IMF, this administration has slashed 15,825 in the public sector jobs in the last year alone and did away with five ministries, mainly those focused on science and education in August. Last week President Mauricio Macri announced the government will privatize the state-run Aerolineas Argentinas all in the name of trying to reduce the primary fiscal deficit to zero percent, down from 2.7 this year.

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Macri ’s party, Cambiemos, seems confident it can pass next year’s budget, which is about US$10 billion less than last year’s. Federico Pinedo of Cambiemos told reporters the budget "is in a position to be approved" as the party relies on their coalition with other parties in Congress. 

The budget “is part of a broader program ... accepted by the government and the IMF jointly and that’s a big problem in Argentina that has a memory of the IMF,” said Kalos, referring to the effect of the country’s most previous Fund loan in the late 1990s that brought on the Argentina Great Depression when unemployment rose to 25 percent.

The Argentine economist tells teleSUR: “We have the worst economy in 20 years,” which he says is remedied with social spending, rather than austerity measures. Kalos says the 2019 expenditure plan “doesn’t promote growth.”  

Local media reports that the president is trying to get the budget passed before the Nov. 30 start of the G20 summit in Buenos Aires to give confidence to the IMF and international investors.

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