Wednesday, July 17, 2024

ECONOMY | 28-08-2023 12:29

Argentina lifts wages, welfare in defiance of IMF austerity push

IMF approved US$7.5-billion cash transfer to Argentina in August; Negotiations over loan included limits on more public spending.

Argentina’s Economy Ministry has announced measures to improve government workers’ salaries and funnel money toward retirees and poorer families, defying an International Monetary Fund appeal earlier this month for the country to spend less.

Economy Minister Sergio Massa, who is running for president, outlined measures that include tax-breaks, higher pension payments, additional money for food programmes for families with kids, and low-interest credit lines. It also includes financing for export products, according to the announcement made on social media Sunday.

The new plan comes after the Unión Por La Patria coalition of President Alberto Fernández, for whom Massa is a candidate, was surprised by the win of libertarian Javier Milei in the primary this month prior to the October election. The measures could put the government in conflict with the IMF, which approved a cash transfer to the government last week following extensive negotiations over its multi-billion dollar loans, after Argentina failed to meet programme targets amid a drought.

“The main objective is that every sector of the economy has help, in some way, from the state,” said Massa in a video, citing the devaluation of the currency and the unprecedented climate crisis as reasons to offer financial support to Argentine families. 

A condition of the IMF’s aid to Fernández’s government was that Argentina step up expenditure controls by limiting public wages and pensions. The lender said in a statement last week that the government would implement a temporary increase in taxes on select goods and services to offset losses from drought-related exports.

by Maya Averbuch, Bloomberg


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