A pro-rich government with a pro-rich budget

Javier Milei returned to Congress, this time to present the 2025 budget. Building a scenario outside the established institutional rules, Milei rehearsed his ultra-right populism again: canceling and insulting those who do not think like himvindicated the chainsaw and the adjustment in the face of a country increasingly hit by poverty.

The novelty is that the government is now trying to rebuild the confidence of the markets by offering them a blank check by modifying the new fiscal rule and subscribing a single priority: paying public debt services. It is clear that the government is concerned about its prospects financial and needs to continue building good expectations, let us remember that on January 9, 2025 it must face payment of interest and capital amortization of the famous AL30 for an amount of US$ 1.7 billion for the first and US$ 2.9 billion for the second

But this budget not only gives that blank check to bondholders and mainly to the IMF, but it is also deeply unfair. The obsession with the deficit is combined with a profoundly cruel distribution of spendingwhich in turn ignores the unequal impact that the crisis already has on the impoverished sectors of our society.

The estimate of retirement spending is slightly higher than this year’s, measured in terms of GDP. A calculation based on inflation falling to 18% annually in December, a scenario so optimistic that not even the financial market foresees it. In any case, if the government’s wishes are met, spending for older adults will continue to be lower than it was in 2023. Meanwhile, tax collection on personal property would fall. In other words, low pensions are maintained to lower the taxes paid by the sectors with the most backs.

The inequity in the distribution of Milei’s fiscal adjustment is also demonstrated by the fact that no item of tax expenditure is modified, that is, the benefits that some sectors obtain by being exempt from taxes. A concept so important that it represents 3.5% of GDP, more expensive than economic subsidies. Inside we can find exemptions from the payment of profits from the judiciary (0.1 pp), reduction of VAT in housing construction (0.15 pp), promotion of mining (0.07 pp) and the knowledge economy ( 0.06 pp), among others. Surely it is not the best way to eliminate many tax expenses, given that they seek to encourage strategic sectors for our country or reduce the cost of some basic products; But it is necessary to debate them in Congress and revalidate their need sector by sector, especially at a time of deep crisis.

Cruelty also falls on future generations: Cuts in science and technology are synonymous with breaking down the ladder to future national development. The budget for CONICET would barely increase 18.2% in 2025, although it is in line with projected inflation, it does not recover what was lost in 2024. A dynamic where SMEs also lose, given that they are going to be defunded very strongly by INTI (National Institute of Industrial Technology) given that its allocation falls in nominal terms, -14.4%.

We went through a very strong recession, consumption fell almost 10% in the second quarter of the year. And you can see that on the street, in the City of Buenos Aires there are fewer and fewer people walking around, people don’t even go out to have a coffee; She is confined to her house, in her neighborhood, because the money is not enough, there are those who no longer have a job. Unemployment in the second quarter reached 7.6% nationwide.

As Cristina Fernández de Kirchner recently said, the fiscal deficit must be reversed, but in such a way that the weight does not fall on those who have the least. And the government is going in the opposite direction. The budget discussion does not have to be about deficit yes or deficit no, it has to be about what country we want to build.

Economist, university professor, director of Banco Ciudad