Milei obtains primary surplus due to non-adjustment of pensions

The tragedy of the economic model defended by the current Argentine government, led by ultra-liberal president Javier Milei, is beginning to become more transparent for the population of the neighboring country, especially for retirees. With Milei, the purchasing power of pensioners fell by 31% in real terms while expenses with public servants fell by 16%.

On the other side of Avenida de Maio, the Chamber of Deputies approved a new rule for readjusting pensions, with correction for past inflation and some real increase. The Argentine president awaits the Senate’s decision and has already threatened not to sanction the law if Congress approves it.

In order to present, in his first year in office, an attractive primary surplus for the Chicago Boys, that is, the positive result of all government revenues and expenses (except expenses with interest payments), Milei has been withdrawing revenues payment of pensions and retirement benefits.

The tactic is to implement an economic squeeze in which government expenses are not readjusted at the same pace as price increases, causing State spending to fall in real terms.

The measure sounded like a warning even to economic agents friendly with the government. The International Monetary Fund (IMF), which has supported the macroeconomic policies of the Argentine far-right leader, reiterated, this Thursday (6), its support for Milei’s fiscal adjustment plan, but signaled the need to apply measures economic policies that protect “the most vulnerable”.

According to data from the Argentine Congress, for every 100 pesos of surplus, 64 pesos were obtained through cuts in pensions.

To stop the old age milling machine, the Chamber of Deputies approved a new rule for readjusting pensions, with correction for past inflation and some real increase, with 67% of the votes from an almost full plenary.

The vote goes to the Senate and, if approved, will be sanctioned by the ultraliberal who has already said he will veto it.

The dialogist opposition and Peronist blocs reached a political agreement that allowed them to move forward with the sanction in the Chamber of Deputies of a new formula for updating pensions, which replaced the mechanism imposed by Milei via decree.

The approved text proposes a monthly update based on the latest data available from the Consumer Price Index, in addition to the inclusion of an extra compensation of 8.1%, given that the 12.5% ​​percentage granted by the government did not cover inflation of January, which was 20.6%.

“Every time the political fiscal degenerates (in reference to deputies) want to break the fiscal balance, I tell them, I’ve said it before, I say it now and I’ll repeat it ad nauseam: I’m going to veto everything, I don’t give a damn,” said Milei during the closing of the Latam 2024 Economic Forum.