Argentine Senate Passes Austerity Budget
The Argentine Senate passed new austerity measures for the 2019 budget on Thursday, cutting social spending and raising debt payments. The steep cuts were introduced in order to meet conditions for a $56 billion bailout from the International Monetary Fund.
The proposal passed the Senate after a 13-hour debate, with 45 in favor and 24 against. The budget had been approved earlier by the lower house of Congress.
Projections show the new budget will lead to a 0.5 percent drop in GDP and 23 percent inflation by the end of the year, a decrease from the current 44 percent. The budget also aims to eliminate the deficit, which is currently 2.6 percent of GDP.
The move signals a legislative victory for President Mauricio Macri, who had previously pledged to make billions worth of cuts in industries such as healthcare, education, transportation and public works, among others. Macri’s approval ratings fell sharply during the economic crisis earlier this year, and with presidential elections looming in October, the new budget could potentially affect his prospects of reelection.
Nevertheless, Macri welcomed Thursday’s vote, saying “this is something we set out to achieve for a majority of Argentines who understand that we have to begin to be responsible, serious, that we cannot continue to live above our means.”
The IMF lauded the move as a “very positive step” for the country that demonstrated a “clear commitment by the Argentine authorities” to strengthen the economy.
However, the budget has proved controversial amongst the public, sparking protests by unions and civic groups both on the streets and outside of Congress. These protests reflect a growing public anger at Macri’s government, which slashed civil service jobs earlier this year to cut fiscal deficit.
Despite critics’ claims that the budget will actually worsen the current recession and cut social spending by as much as 35 percent, the bill will now pass to the president to be signed into law.
The bailout is intended to bolster recovery in Argentina following this year’s economic crisis, when the peso fell to less than half its value.