In the words of the president Javier Milei, the Argentine population had to endure “the largest adjustment in the history of humanity” in 2024. In numbers that would be approximately 4.4% of GDP, just over US$36.5 billion. and represents the largest adjustment since 1985 (under the government of Raúl Alfonsín within the framework of the Austral Plan).
As anticipated by Palacio de Hacienda in its latest report from the National Public Sector (SPN), the year will close with financial surplus of 0.3% of GDP and a primary surplus of 1.9%.
In December of last year, the deficit was 4.1%, according to data from Argentine Institute of Fiscal Analysis (IARAF). So, to this, we must add the balance in favor with which the year will end and thus the magnitude of the chainsaw can be estimated.
When the year closes, this It cannot be explained by higher tax collection, since this fell throughout the year, except for a couple of exceptions, such as in June, due to extraordinary income from Income Tax, and in October, due to the effect of money laundering, tax package and moratorium.
So, What will explain the result is the effort of the population on whom the weight of the spending adjustment fell, which on average will drop by 30% throughout 2024.
Above all, it is related with the pension system, which explains most of the cut. In that case, according to the IARAF, of the total expenses that fell in the first 11 months, It is appreciated that retirements and pensions supported 21% of the total, real direct investment 15%, transfers to provinces 16%, energy subsidies 9% and social programs 12%, salaries 9%among the most important expenses.
In the first eleven months of 2024 in concrete numbers, public spending fell $36.5 billion pesoswhich implies in official dollars, a drop of US$36.5 billion. In December, this number may not change or decrease marginally.
According to data from IERAL, the business school of the Mediterranean Foundationthe correction of the government of Javier Milei is the second most important since records began. In 1967the adjustment was equivalent to 1.7 of GDP. In 1977 there was one of 1.7%; in 1984, one of 1.4%; and in 1985, one of 4.6%, the year in which Alfonsín and Juan Vital Sorrouille launched the Austral plan. Not even the tragic exit from convertibility represented a major adjustment. In 2002 it was only 1.7% of GDP
Source: Ambito
