Looming disaster episose 8764

The Government told the IMF that poverty already affects more than 50% of Argentines

In a document presented to the international organization, the Ministry of Economy made a harsh diagnosis of the current economic panorama and assured that they are doing everything possible to protect the most vulnerable sectors.

(They are not doing anything to protect the vulnerable sectors)

The government estimates that more than 50% of Argentines live below the poverty line and that number is close to 60% for children, according to the letter of intent presented to the staff of the International Monetary Fund (IMF).

The document signed by the Minister of Economy, Luis Caputo, and the head of the Central Bank, Santiago Bausili, ensures that the current administration “has inherited the worst economic, financial and social situation in our history, with an economy on the brink of a crisis.” due to chronic and widespread macroeconomic imbalances.

Partially true. I don't think this is the worst inheritance a government had in history, but since the return of democracy (1983) it probably is. The disaster of today (milei) can be explained with the disasters of yesterday (Fernandez and Macri).

In this sense, they stated: “Real salaries have decreased and levels of informality and poverty have increased. Today, more than 50% of Argentines live below the poverty line, and that number is close to 60% for children.” According to the latest data available from Indec, in the first half of 2023, poverty reached 40.1% of the population.

As a solution, they indicate that they are in the process of implementing “an orthodox and ambitious stabilization plan aimed at correcting the extensive policy failures of the previous administration to avoid the collapse of the economy.” In this regard, the letter of intent states: “Our program is based on an ambitious fiscal adjustment of approximately 5 percent this year, achieved through a balanced combination of spending cuts and, initially, temporary revenue measures, which provide room for increase social assistance.”

Regarding the fiscal deficit, Caputo and Bausili assured that in 2023 it exceeded 5% of GDP, reaching and rising to 15% when taking into account quasi-fiscal costs. “The monetization of the 2023 fiscal deficit by the Central Bank reached 5% of GDP, fueling inflation, creating a large oversupply of pesos and significantly weakening the central bank's balance sheet,” they considered.

“Upon taking office, we faced a dangerous 5% collapse in industrial activity and uncontrolled inflation already at a daily rate of 1.5%, close to hyperinflation. We also had imminent payments to the IMF and international bondholders of over $2.5 billion. With insufficient international reserves in the Central Bank, we face the risk of not being able to meet our external obligations,” they said as a diagnosis of the country's situation.

“Liquid international reserves were depleted, and net international reserves fell to an alarming deficit of USD 10.3 billion. In short, misguided economic policies led to the loss of access to private financing and jeopardized access to crucial multilateral financing,” they added.

With this diagnosis, the Minister of Economy details in the document that public spending is being drastically rationalized through several cuts in poorly directed and inefficient energy and transportation subsidies, public employment, capital expenditures and transfers to provinces and state companies.

Which makes everything more shittier. Like, for the sake of argument, I """understand""" the """need""" to cut subsidies to transport and energy, but now people have to pay much more in taxes and transport fees without any compensation. As it article said before, salaries dropped significantly and are losing to monthly inflation, most workers are NOT getting raises. We don't have the pockets to face the current economic disaster.

“Revenue is being mobilized through a temporary increase in export taxes and the tax on access to foreign currencies (Impuesto País), as well as efforts to reverse harmful changes in the personal income tax,” it indicates.

And he adds: “Over time, we will seek to safeguard our consolidation and improve the quality of adjustment, including through reforms that strengthen and simplify the tax system, improve the sustainability and equity of the pension system, and continue to reduce the burden while increasing the efficiency of public spending, including in areas such as subsidies, social programs and infrastructure.”

However, the IMF indicated in its report that this stabilization plan must include a temporary expansion of specific social aid to protect the most vulnerable from the initial burst of inflation and the contraction of activity. The recommendation of the agency's staff is based on the fact that "Argentina has experienced a constant increase in poverty, amid accelerated inflation and the decline in real wages."

“The latest statistics until the first half of 2023 suggest that poverty has reached 40%, with 56% of children below the poverty line and almost 10% of the population in extreme poverty. Preliminary estimates (based on World Bank models) suggest that total poverty has increased to around 45% more recently, driven by increases in the price of the basic consumer basket (up 190% year-on-year through November) and decreases in the real wages of informal workers (a decrease of 20% year-on-year in October),” they noted.

Taking into account that the government will implement “policies to correct exchange rate and relative price misalignments (for example, public transport tariffs that covered less than 8 percent of the cost of service and lower level energy bills that represented only 15 percent of the real production costs), the Ministry of Economy indicates, in line with the requests of the IMF, that they are doing everything possible to protect the most vulnerable sectors of Argentine society and ensure that the burden of adjustment falls on those who receive excessive privileges.

Pure garbage from the IMF. We're here stuck in this place thanks to them too.

And it's going to get worse. I work night shifts (delivery) and there's a ridiculous amount of unhoused people living in the streets, small kids walking around, entering businesses and asking people for money. It's heartbreaking to see entire families sleeping together in one matress, people opening up garbage containers in search for food or scraps they can sell. The number of Cartoneros (People who collect cardboard or paper to sell) has skyrocketed as well, you see them moving their huge carts, which are insanely heavy, all day long. It must be incredibly painful to work like that under the scorching sun in the middle of summer at 38°C, all of that for pennies. Power to them.

This country keeps more than half of it's children under poverty line. It's a disgrace, it's shameful.