A new report shows that President Javier Milei’s “chainsaw” cuts have slashed some 50 trillion pesos off Argentina’s public spending since he took office in December 2023.
According to an analysis by the Instituto Argentino de Análisis Fiscal (IARAF), around 50 trillion pesos – around US$8 billion, according to the report – has been trimmed.
The IARAF estimates that Milei made cuts of 27.2 percent, reducing primary spending from 185 trillion pesos to 134 trillion pesos in two years.
Milei won the Presidency by promising dramatic cutbacks to the public purse. This week, he said he would continue on that path, whatever the result of his 2026 Budget bill, which is currently being debated in Congress.
The bill has already cleared the lower house Chamber of Deputies though the government’s attempted repeal of University Financing and the Emergency for the Disabled laws was rejected by lawmakers.
Asked this week if he would veto the Budget, if it did not meet his strict fiscal targets, Milei vowed to stay the course. "I’ll shuffle the spending to reach zero deficit," declared the La Libertad Avanza leader, adding that further cutbacks would follow.
According to the IARAF, Milei’s biggest cuts have been from money sent from the national government to provincial governors. Capital transfers to the provinces have fallen 93.8 percent – an unprecedented adjustment.
Meanwhile, subsidies elsewhere plunged 83.9 percent with real direct investment retreating 73.5 percent. Furthermore, in the framework of heavy state austerity, spending on salaries dropped 26 percent.
On the other hand, the PAMI healthcare scheme for the retired maintained its spending levels while spending on the AUH universal child benefit rose 70 percent in real terms (i.e. discounting the effects of inflation) to 2.7 trillion pesos, making it the only item to see an increase.
Heavy cuts were also made to social programmes, including the pension bonus among other items, which dropped by 10.5 trillion pesos as of last month, followed by energy subsidies (8.8 trillion pesos) real direct investment (8.3 trillion pesos). Spending on salaries dropped 6.3 trillion pesos.
According to the analysts, higher child benefits would explain, along with lower inflation and the creation of informal jobs, why poverty was reduced to 27.5 percent in the third quarter of the year, according to the government data tracked by the INDEC national statistics bureau.
– TIMES/NA
Comments