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August 19, 2017
Friday, January 6, 2017

The whats and whos of cuts

One of the main thrusts of the fiscal plan to streamline public spending expected from the brand-new Treasury Minister Nicolás Dujovne is reportedly to be the merger of overlapping departments but that aim was contradicted at the very start of Dujovne’s mission — namely by the creation of his portfolio from the binary fission of the Finance Ministry. That is not the only mixed message. There is supposed to be an explosion of public works spending in this electoral year but at the same time the fiscal deficit is to be sharply reduced — a deficit estimated at 5.6 percent of gross domestic product by as friendly an observer as Dujovne himself (when writing as an economic columnist some weeks ago) as against a target of 4.8 percent of GDP (at the same level that Mauricio Macri inhereted from CFK a year ago). That latter figure might actually be respected thanks to the extraordinary success of the tax whitewash (an intake of some US$98 billion by the end of 2016) yet this money is a one-off windfall — ostensibly to fund the “historic reparation” of pensions, it is already being stretched for a multitude of purposes.

Yet returning to the idea of merging overlapping tasks and functions, it needs to be spelled out much more clearly if streamlining is to be seen as synonymous with downsizing, as would seem logical. Thus far the massive reduction of the public sector seems to belong more to the blueprints of ex-CEO deputy Cabinet chiefs and orthodox economists than to the reality of the Mauricio Macri administration. Apart from former finance minister Alfonso Prat-Gay muttering about “fat” in the second week of 2016 (he has since paid the price), there have been almost no official noises in that direction — even if the government’s pet word of “productivity” hints that way. Not only did Macri’s purges at the outset of his presidency barely reach five digits out of a national state workforce of some 3.5 million people at all three levels of government — there are reasons to believe that the fall in unemployment from 9.3 to 8.5 percent between the second and third quarters of 2016 within the context of a sharply recessive economy was in large measure due to the continuing expansion of public employment (especially at provincial but also at national level). Some very recent developments such as slashing Conicet national research council intake by two-thirds and axing 400 Education Ministry jobs have suggested a more aggressive attitude in the worst way but in both cases the backlash has shown these pushes to be far from irreversible.

When and if the new fiscal plan is presented, it needs to be quantified in terms of jobs as well as sums of money. Is there some magic formula whereby overlapping programmes can be vaporised without the jobs staffing them or will there be a huge transfer of people now working in offices to the roadwork etc. in the presumably expanded public works or will there in fact be massive public-sector layoffs? Everybody needs to know.

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