Lawmakers in Argentina’s lower house of Congress approved on early morning Thursday an unpopular austerity budget designed to meet the stiff requirements of a US$57.1 billion International Monetary Fund bailout.
The final pre-dawn vote came after a marathon, rancorous debate and a day of unrest with police firing tear gas and rubber bullets at demonstrators throwing rocks outside the legislature building to protest a bitter cocktail of tax increases and spending cuts.
Factions of the opposition backed President Mauricio Macri’s center-right Cambiemos coalition to pass the bill in a 138-103 vote with eight abstentions. The draft now goes to the Senate, where it is expected to win final approval.
The Macri government would like to have the budget discussed and promulgated no further tan mid November, in time for the coming G20 summit hosted by Argentina.
Unions and the opposition have criticized Macri’s program of sweeping spending cuts to meet the deficit reduction requirements of the IMF loan, originally approved in June before being increased at Macri’s request this month.
The budget left a bitter taste on the streets and further protests are expected.
The bailout is supposed to help Argentina recover from an economic crisis that has seen the peso lose half of its value this year. Inflation is forecast to finish the year at 40% and the economy is expected to shrink by 2.6%.
“We are in a crisis and the government must take responsibility. Social problems and the recession oblige us to pass the law,” Cambiemos party lawmaker Mario Negri said in a speech after the budget passed. “To have no budget would be a defeat for the country,” he added.
Macri has pledged a swathe of cuts in health, education, science, transportation, public works and culture to the tune of US$10 billion.
During a fraught day Wednesday, demonstrators outside the legislature shouted “No to the IMF budget. Don’t cut our future!” while inside, tempers ran high as lawmakers traded insults ahead of the vote.
Nine police were injured in the clashes, authorities said, while 27 demonstrators were briefly detained.
Street protests have reflected growing public anger after Macri slashed traditionally-safe civil service jobs as part of a bid to cut Argentina’s fiscal deficit and tame inflation at the IMF’s behest.
The budget deficit was 3.9% of GDP last year. The government aims to get it down to 2.7% in 2018 and zero by the end of next year. To halt the collapse of the peso back in April, Macri’s government reached a bailout deal with the IMF, with which Argentina had practically severed relations after defaulting on its foreign debt in 2001.
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