When he announced that Argentina had reached staff-level agreement with the International Monetary Fund last week, Economy Minister Luis Caputo made it clear that President Javier Milei’s chainsaw was still running; the official, with no signs of concern on his face, warned that there will be tougher economic measures in the short term if the head of state’s ‘Omnibus Law’ bill falls into disgrace.
Within La Libertad Avazna, a series of provisions for the future have already begun to take shape, with a focus on the pruning of state personnel and subsidies for public transport and energy.
The man in charge of the Treasury has managed in a very short time to establish a very good relationship with the head of state, with whom he talks daily. The harmony between the pair has reached the point that, before each interview and public appearance by the president, they consult each other and agree on the issues to be discussed.
Therefore, what the minister said on Wednesday night about future austerity if the bill being debated in Congress does not come to fruition – in the middle of the press conference detailing the handshake with the multilateral lender – did not attract the president's attention at all.
Moreover, as Perfil was able to reconstruct via reporting, Milei shares Caputo's idea that so far, everything that has been done in economic matters, has been carried out "without the need to implement a fiscal shock." For both, here is more than enough margin to continue cutting state financing, with several points to attack.
The main focus, which is already part of the government's obsession, has to do with state personnel. In a back-and-forth that included interventions by Presidential Spokesman Manuel Adorni, the overtime of state employees will be thoroughly examined. At the same time, progress will be made on salary freezes, despite the protests of trade unions, which at this stage are constant (tomorrow there will be another one at the CCK Kirchner Culture Centre), and there are 70,000 contractual relationships in the public administration that have been renewed but only for 90 days – the vast majority will end without extension when they expire. It is expected that many who today have jobs in ministries and public bodies will leave their posts and go directly to the private sector.
A source in the ATE state workers’ union – one of the most combative unions against the libertarian administration – told this newspaper that the government is creating a whole series of reasons so that public employment will not be an option in the future.
Pruning has a good chance of being implemented in the Communication Secretariat, which has been directed for the last weeks by journalist Eduardo Serenellini, which today has 500 employees. According to LLA sources, the Secretariat could be left to operate with just 50, after an audit that was carried out. That assessment has reached the hands of President Milei, his Cabinet Chief Nicolás Posse, and Armando Guibert, the man overseeing the State Transformation Secretariat and the civil service.
There will be more information on the staffing levels of each governmental area next month thanks to the Sindicatura General de la Nación, which is headed by Miguel Blanco. According to Decree 126/2023, released on January 3, Milei gave the body’s officials 30 working days to put together a report on areas and issues critical to the functioning of each agency.
"In addition, the decisions and actions of the new authorities must be properly prioritised, and the necessary changes and reforms must be designed, planned and carried out," read the official statement, stating that the Milei administration intends to "have accurate and adequate information on the administrative, patrimonial and financial situation and all other activities underway in each of the bodies that make up the national public sector.”
Energy and public transport subsidies are also in the government's sights. Caputo warned last week that "people could suffer more" simply because state assistance to bus companies operating in the Buenos Aires Metropolitan Area could be withdrawn from one day to the next, which would lead to an automatic and very sharp increase in fares.
For now, Milei's administration is relying on gradualism and has decided on a gradual withdrawal of funds for public transport, resulting in a month-by-month increase in fares.
A similar situation is happening with gas subsidies. Energy Secretary Eduardo Rodríguez Chirillo spoke of a new conceptualisation of funds with a "gradual transfer" and "progressive readjustment" of state transfers. This will result, as the official mentioned in a public hearing, in fare increases in the order of 33 percent over the next three months. The scheme, however, could change overnight and violently, with a sharp tariff increase for tens of thousands of users.
There is another unavoidable fact in understanding the movements of the chainsaw: they all have the IMF's backing. The harmony between Milei and the IMF is more than positive and he knows that any plan that includes cuts will have the full backing of the multilateral lender.
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