Despite International Monetary Fund (IMF) pressure to reduce spending, Argentina resists IMF pressure and increases wages and social protection.
The Ministry of Economy has revealed plans to boost public sector wages and allocate more funds to the poorest families and retirees.
Economy Minister and presidential candidate Sergio Massa detailed several initiatives as reported by Bloomberg.
These include tax reductions, increased pension payments, additional funding for family food programs, and low-interest credit lines.
Additionally, the new initiative involves financing for export products. This move follows the surprising victory of libertarian Javier Milei in the August primaries.
The victory was ahead of Argentina’s October elections and shocked President Alberto Fernández’s Unión por la Patria coalition, of which Massa is a candidate.
Maya Averbuch, a Bloomberg analyst, suggests that these actions “could put the Government in conflict with the IMF.”
On August 23, following comprehensive discussions about its multimillion-dollar loans, the IMF approved a US$7.5 billion disbursement to Argentina after the country failed to achieve program targets during a drought.
In his address, Massa cited the unprecedented climate crisis and currency devaluation as justifications for offering financial assistance to Argentine families.
The IMF loan to the Fernández administration was contingent on Argentina intensifying spending controls by capping public wages and pensions.
In its statement, the financial institution urged Buenos Aires to implement a temporary tax hike on specific goods and services to counterbalance the export losses caused by the drought.
Argentina is the largest debtor to the IMF, which, in 2018, provided the Macri government with the most substantial single-country credit in its history.