[stop-imf] ARGENTINA: Gov't Cuts Wages to Meet IMF Commitments (fwd)

[Robert Weissman]

Title: ECONOMY-ARGENTINA: Gov't Cuts Wages to Meet IMF Commitments

By Marcela Valente

BUENOS AIRES, May 29 (IPS) - Argentina's government announced cuts
Monday in public sector salaries and pensions and the shutdown of
some government offices in order to bring the budget deficit down
to 4.5 billion dollars and keep its promises to the International
Monetary Fund (IMF).

Economy minister Jos=82 Luis Machinea reported that the spending
cuts amount to 938 million dollars, and flatly rejected the
possibility of a devaluation of the Argentine peso or a
''dollarisation'' of the economy in an attempt to boost the
nation's competitive strength on international markets.

Machinea called the announced measures a ''reassignment'' of
resources because a portion of the savings is to be earmarked for
social, health and education programmes.

Labour unions particularly criticised the cuts in salaries for
national public administration employees, and announced that they
would hold a march Wednesday to protest the IMF requirements.

V=A1ctor de Genaro, leader of a government workers union, pointed
out that the announced adjustment is not impartial, but seeks to
ensure the transfer of resources from the public sector to a group
of powerful private enterprises that enjoy fiscal and financial
privileges.

With the salary reductions, the government expects to reduce the
fiscal deficit from 10 billion to 4.5 billion dollars by the end
of the year. This goal is the deficit level Argentina committed to
before the IMF, which this Tuesday will send a delegation to
Buenos Aires to monitor the performance of the economic programme.

Less than six months into his term, president Fernando de la R=A3a
has launched two budget adjustment packages. The first consisted
of tax increases, which was made into law in March, but the
results have been a disappointingly meagre increase in money for
the government coffers.

Accompanied by all his ministers, De la R=A3a emphasised the
magnitude of the fiscal deficit inherited from his predecessor,
Carlos Menem (1989-1999) and affirmed that the measures announced
Monday to ''restructure the State'' uphold his goals for
''equitable growth.''

The president justified the new adjustments, implemented after a
series of delays, pointing to the adverse international
circumstances, such as the interest rate hike in the United
States, the devaluation of the Euro with respect to the dollar and
the instability of the world financial markets.

This scenario - on top of the tax collections that increased
barely two percent in March and April, and then fell in May -
prompted independent economists to calculate that the Argentine
economy would grow just two percent, instead of the projected 3.5
percent, and that unemployment would remain at a high 14 percent.

In simple terms, the new measures mean that public employees who
earn between 1,000 and 6,500 dollars per month will see a 12
percent reduction, and those with higher salaries will take a 15
percent cut.

The wage cuts will also affect the Legislative and Judicial
branches, though judges' paychecks will be spared the axe.

As far as government incomes at the provincial level, the De la
R=A3a administration called for ''urgent repairs'' of the situation
in which certain legislators and city councillors earn incomes are
several times greater than that of the president, which is 4,800
dollars per month.

''The greatest part of the effort must be made by political
leaders, who are asked to make personal sacrifices,'' De la R=A3a
said. Economy minister Machinea, meanwhile, pointed to the
''intolerable'' salary disparities existing in the public sector.

The paychecks of government ministers are twice that of the
president, and lawmakers see incomes of between 5,000 and 27,000
dollars each month, depending on whether they serve in the
national or provincial legislature. Some city councillors earn the
more than a national lawmaker.

The federal government's adjustment measures also call for the
closing or merging of public offices, including the areas of
sanitation control, economic research, the congressional printers
and the official news agency, Telam, which will no longer produce
government publicity and will go through full restructuring.

Machinea emphasised that public employees will not be eligible to
collect pensions from other jobs and the especially large pensions
of the standout government posts will be reduced by 33 to 50
percent.

De la R=A3a and Machinea stressed that social spending will not be
reduced. On the contrary, they announced the creation of a Social
Solidarity Fund for emergencies in the country's interior, and
that government expenditures for workers' health services will be
expanded.

In the area of government investment, De la R=A3a's announcements
were less spectacular. The government had to back off from an
ambitious infrastructure programme, though it expects some 10
billion dollars in private investment over the next three years.
(END/IPS/tra-so/mv/ff/ld/00)