Argentina has one of the highest rates of spending in utilities and services in Latin America which went from 6 percent of Argentines' salaries in 2016 to 23 percent in 2018, according to a new report by the University of Avellaneda, changes that have taken place under the government of right-wing President Mauricio Macri.
To put this in perspective, the hikes represent roughly 2,057 percent in natural gas, 1,491 percent in electric energy, approximately 1,000 percent in potable water services, 677 percent in toll booths and 375 percent in train tickets, just to name a few.
This move by Macri’s government isn’t just part of a solitary adjustment measure — it corresponds to a new “paradigm” which guides government measures intended to pave the way for future international finance deals. Specifically, cutting state spending on subsidies as per requirements by the International Monetary Fund (IMF).
This type of macroeconomic strategy shifts the financial burden away from companies to the taxpayers. “Earnings in dollars from such companies end up being paid for by the entire Argentine production chain as well as families,” according to the report. To illustrate this, in the last three years public services such as electric energy, gas and potable water services saw a 17.2 percentage increase on minimum salaries during the last three years.
The price hike comes just weeks after protests against Macri, in the context of a meeting held with IMF President Christine Lagarde, in New York. Macri recently signed a US$50 billion “emergency” loan with the IMF with the purpose of reducing the country’s debt; however, the announcement of the measure led to a 30 percent loss of its value against the U.S. dollar.