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Javier Milei’s adjustment in January was the most severe in the last 30 years

The government of J.avier milei is carrying out the adjustment of public spending most severe in the last 30 years, something that the president is proud of. He assures that “nobody did it” before and if it is because of its magnitude, he is right.

As pointed out by the Argentine Institute of Fiscal Analysis (IARAF), the cut reached to 39.4% in real terms, a figure that has no comparison since 1994.

“It is appreciated that 15 of the 16 spending components had falls. The exception was the benefits of the National Institute of Social Services for Retirees and Pensioners – INSSJP (PAMI), which had a real year-on-year increase of 3.4%,” says the IARAF.

Spending cuts: the items with the biggest drop

The report maintains that “The items that had the greatest real fall were capital transfers to provinces (- 98.3%)subsidies to other functions (-92.2%), real direct investment (-81.2%), energy subsidies (-77.2%) and current transfers to provinces (-72%).”


But, from the point of view of the importance they have in the spending structure, The items that shrank the most were retirements and contributory pensions (- $885,074 million)energy subsidies (-$366,451 million), real direct investment (-$321,474 million) and total transfers to provinces (-$310,781 million).

Between the four of them, they contributed almost $1,883,000 million in January 2024 currency, that is, 70% of the total saved,” explains the report.

In historical terms, The January 2024 spending cut is the deepest since 1994. The next largest adjustment was in March 2003, at 29.2%. It was President Eduardo Duhalde and his Minister of Economy, Roberto Lavagna, who was going to continue in office with Néstor Kirchner.


The third large spending adjustment was in April 2021 with 22%, during the presidency of Alberto Fernández, with Martín Guzmán at the head of the Treasury Palace.

The adjustment that is being made now by the libertarian government It is even deeper than the one that took place in December 2001 in the midst of the terminal convertibility crisis. In the month of the fall of Fernándo De la Rua with Domingo Cavallo in the Ministry of Economy, the drop in spending was 20.8% year-on-year.

Then, a year later, In December 2022 with Alberto Fernández he was going to carry out another mega adjustment of 20.5%with Sergio Massa in command of the economy.

Other important adjustments were May 2021, 20.5%; June 2002, 19.7%; April 2016, 19.2%; December 2018, with Mauricio Macri, 17.4% and March 2023, 17.3%.

The biggest adjustment in three decades

Although the libertarians with Javier Milei can “take credit” for being the ones that have made the most spending adjustments in the last 30 years, It can be stated that of the 10 most severe cuts, seven were made by Peronist governmentsone by a radical, and another by the liberals of the PRO.

The consulting firm Sarandí, directed by economist Sergio Chouza, points out that “the beginning of Milei’s management had two main objectives, putting the fiscal picture in frame.carrying out a general ordering of public accounts, and avoiding the imminent financial collapse at the end of 2023.”

“To meet the first challenge, a very strong cut was made in public sector expenditures, cutting total spending by 39.4% at the beginning of the year. Thus, January produced a significant surplus, which “It was celebrated by the Government, despite it being a month with low requirements in primary applications,” he noted.

According to official data from the National Public Sector for January, on a total of $2 billion of primary surplus registered in the first month of the year, Retirements contributed a cut of $890,000 millionwhich is equivalent to 45% of the result.

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