The International Monetary Fund, IMF, has released its 2017 outlook and recommendations for the Argentine economy.
The report pushes for a “decrease in government spending” and an increase in privatization and consumer spending to “increase productivity," decrease the national deficit and reduce the country’s 23 percent inflation rate.
Argentine President Mauricio Macri and his right-wing Cambiemos coalition in both the House of Deputies and Senate have already been working this past year to implement the IMF austerity measures far ahead of the official publication released yesterday.
In line with IMF recommendations, Argentine politicians voted last week to reduce the country’s corporate tax rate from 35 to 25 percent and increase the retirement age to 70 for both men and women, up from 60 for women and 65 for men. Last week’s legislation will also significantly reduce government investment in national pension and retirement plans as well as welfare spending for the poor. The votes prompted thousands of marchers to protests against the reforms in Buenos Aires.
The IMF report calls for “reducing public employment ... based on hiring freezes over the next two years” to reduce spending by one percent by 2019. In step with the international organization's recommendations, the administration did not renew some 15,000 government contract jobs this week and pledged to slash more in the coming year, prompting the State Workers’ Association, or ATE, to announce a national strike for next week, Jan. 4.
Since Macri took office in Dec. 2015, his administration has cut approximately 108,000 public jobs.
The government was ahead of IMF recommendations to “reduce energy subsidies” for the Argentine population, significantly reducing energy and gas subsidies resulting in a 500 percent price increase for electricity and a 300 percent jump for natural gas in some areas over the past year. Argentine gas prices rose by 29.5 percent in some parts of the country in 2017.
The IMF also calls for drastic labor law reforms “lowering ... severance payments ... and simplifying collective dismissal procedures.” For several months, Macri has been threatening to pass legislation to reduce union collective bargaining power, among other provisions.
The IMF made its second visit to Argentina in October, after an initial stop there in 2016. Former President Nestor Kirchner expelled the IMF from Argentina in 2004, alleging that the IMF's statistical systems were questionable and relied too heavily on international financial markets to make its recommendations.
The IMF consists of 189 member countries and claims to “foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth and reduce poverty around the world.”
Over the past three decades, critics of the IMF have said that the organization targets developing nations and convinces governments to apply draconian economic policies that have too many conditions attached, disrupt national sovereignty and only provide “one-size-fits-all” solutions.