I am going to interspers with the IMF’s own vision of the importance of investment in public goods and services. An IMF vision that is often not fulfilled by shared responsibility of the agency and the countries that apply such policies. That divorce between postulates and policies that breaches rules of the background itself and enables a future discussion.
According to document 55-S of the IMF “Fiscal adjustment for stability and growth” Prepared by various authors of 2006, “although fiscal consolidation can reduce the risk premium on interest rates, favoring the growth of private investment and raising the value of assets, which stimulates private consumption and relieves supply limitations, the State must provide that public spending should be directed to the aspects of greater social profitability complementing the private sector, without excluding mutually.”
The IMF recognizes that the policies of the agency, which is part of the United Nations system with norms of universal legal application, the millennium objectives must be satisfied, including the reduction of poverty, illiteracy, the decrease in infant mortality and avoid the degradation of the environment. It is not just a moral issue, it is economic rationality generating the bases for sustained growth.
In the words of the IMF itself: “The quantity and quality of these services (public) is key not only to achieve greater growth, but also for human development. Parallel goals of growth and human development are related to each other, since human capital can constitute a powerful engine for economic development for economic development
For the fund, the cost of reducing public investment implies resigning growth and development. This means financing or supplying directly necessary public goods “that the private sector does not offer properly due to” market failures or deficiencies. “The truth is that certain categories of public spending can influence long -term growth – especially expenses in education, health and infrastructure. A greater growth, which in turn generates more fiscal resources to finance productive spending.”
It is clear that a country like Argentina cannot have permanent fiscal deficit because it lacks a strong currency that allows it to finance imbalances and has a high level of indebtedness to anchor it with debt.
What is discussed is the way in which the adjustment is made both the quantity and quality of the expense that is reduced, in whom the adjustment falls and for this the income and expenses policy must be discussed.
Instead of becoming a rationalization of unproductive expense and collecting taxes to those who have high wealth and income capacity and therefore contributory capacity. The Government applies a chainsaw that brutally trims health, education, infrastructure and scientific and technological research spending. Politics consisting with what the President said to be the “mole” that destroys the State from the inside. The Government does not propose to eliminate unproductive and unfair spending and rationalize the State to improve the quality of public benefits but its elimination which implies compromising the future growth of the country and consolidating a very inequitable distributive matrix. With the complicit IMF.
Let’s see synthetic some paradigmatic examples of divestment in health, education, science and infrastructure.
Garrahan hospital scrap. A hospital of excellence that has been treated for decades of high complexity to which they suffocate budget.
In 2022 the salaries of doctors, paramedics and health personnel exceeded 30% to that of other CABA hospitals. In 2025 these salaries are 15% below the hospital system of the city. The hospital is losing plant doctors and residents, compromising public health in the short and medium term.
This is consistent with the reduction of the health budget in the various hospitals and health centers, in the benefits of the PAMI and in education at all levels in particular the de -financing to the universities where the budget is barely reached for the payment of wages that fall in real terms.
Destruction of CONICET
The Government is considering a reform proposed by the Freedom and Progress Foundation that proposes to modify the Law of Science, Technology and Innovation and the law that establishes the Conicet Statute in order to eliminate the career of researchers, transfer activities to the private sector, reduce research in hard sciences and focus only on applied science that demands the private sector prioritizing projects that do not have non -state support.
In the world it is reversed in science that in some cases applies years later. Clearly the private sector does not finance research that requires years and uncertain result. Only the world worldwide finances scientific research that implies improvements in health and quality of life.
The destruction of the research system and the reduction of the Inti, INTA, Arsat and Invap budget An example of an efficient state company that develops satellites, radars, nuclear reactors and nuclear medicine won international tenders, it is opposed with growth policies and the good policies that the fund itself must legally support.
PARATE OF PUBLIC WORK
No country in the world has suppressed expenditure on public works essential so that there are private investments and an improvement in the quality of life of Argentines.
Public works expense fell 52.1% so far from 2025 in relation to the same period of 2024. According to the Argentine Chamber of Construction, US $ 100 million requires to compensate for the deterioration of divestment on the routes in the last 18 months.
The chainsaw also affects energy investments. The investment in gas pipelines made until 2023, allowed to achieve an energy surplus after more than 20 years that attenuates a dangerous external deficit that the country finances with indebtedness.
For the IMF itself “public spending must be tried for its effects on growth and investment, as well as poverty and equity. Apart from the basic functions of the Government, the main argument in favor of the intervention of the public sector is the presence of market failures (for example, positive externalities, public goods and imperfect financial markets). The public spending also plays a redistributive function, especially when it is oriented. No objection of the IMF is observed to policies that contravene their own postulates.
According to the Congress Budget Office, In 2024 the investment in energy fell 49.9%, in transport 82.7% in water and sewers 82.5% and in housing 81.6%. Public investment was reduced from 1.3% in 2023 to only 0.4% of GDP in 2024 (with a lower product).
In 2025, capital expenditure fell 28.5% year -on -year and only 16.4% of budgeted expenditure was executed. As a counterpart if public spending increases in items for the SIDE or interest interest.
But let’s not see only what happens in spending. Let’s see what happens to public income. Argentina does not have an excessive total level of collection. According to 2022 figures, the country collects 29.6% of its GDP, such as Bulgaria, Israel and Jamaica. A level lower than Brazil 33.3% or Spain (36%) and also from France, Italy and Germany that collect between 40 and 45% of GDP.
The problem is that the country has a poorly distributed tax burden with unfair exemptions (financial income, judges, for example) that live with distortive taxes and a regressive tax system. There is a comprehensive tax reform to finance the State efficiently and fairly and reduce the tax burden on formal sectors with high tax burden that affects SMEs and middle sectors. It is not a problem of lack of resources. It is a problem of a bad assignment of spending and an inefficient and unfair tax policy.
The Government tries to achieve a fiscal cash result in the short term at any cost. This implies, privatize, suppress and dismantle organisms, policies, functions, infrastructure, research for a mere short -term accounting result.
In the 90s, the IMF endorsed these policies, which included creative accounting and even the computation of income for sale of assets, such as the sale of YPF at minimum prices, to improve the short -term fiscal result, in order to comply with the quarterly goals of the program with the agency. Policies without any investment criteria and infrastructure.
We know what happened in 2001. Just that year and for the rude failure with Argentina, the IMF reviewed the guidelines included in its 1985 public finance manual and made a self -criticism of merely accounting adjustments that compromise the sustainability of the country.
This involved computing as a fiscal result the cash balance and not the accrued, and considering only the flows and not the “stocks”, without computing the loss of future income or the loss of assets, in addition to endorsing the generation of floating debt.
No family or company acts rationally if it celebrates a good cash result if it is expenses of the value of its assets.
A short -compliment look that is repeated in the present. The IMF is endorsing a debt growth strategy. As the government places public bonds that capitalize interest, this improves the financial result, but at the cost of greater indebtedness. A myopic version that implies a higher country risk.
The Government’s policy endorsed by the IMF is clearly short -term, it conspires against long -term growth, generates more inequality and therefore puts at risk even for the IMF conceptual vision the sustainability of the debt.
The IMF recognizes that the “adjustment” is more lasting and sustainable when a) protects capital spending and that b) sustainability depends on consensus and not by imposition of a bias. Both requirements are absent in this program.
For the bottom, “Fiscal responsibility requires a broad and precise political consensus of broad support so that it can be applied successfully. These conditions may not be satisfied in countries that face large macroeconomic imbalances or a great political instability”.
The IMF endorses this non -sustainable strategy giving greater indebtedness. As the IMF is a “privileged creditor” seems not to worry about the consequences of endorsing harmful practices for the sustainability of the country. Failure to comply with good practices by the IMF, including the departure of its statutes and norms, enables the discussion for a renegotiation of the future debt, including the differential of the “exceptional access” credits with the IMF above the ordinary indebtedness stops. We talk about political credits without technical support (as happened in the past with late self -criticism) that will merit a political solution when they drag the country to a dead end.
As we analyze in this article the economic program deepens macro imbalances and that always generates political instability. A responsibility of the Government and the IMF that for the third time in 25 years (90 and 2018-2019) supports unsustainable policies, without broad consensus, that they have and will have a high economic and social cost in the future and that therefore the reality itself will force them to be inexorably modified in the future.
Source: Ambito
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