After splitting up the Economy Ministry and ousting its (now) former Minister Alfonso Prat Gay, President Mauricio Macri appointed Nicolás Dujovne as Argentina’s Treasury Ministry this week, assigning him the task of reducing the country’s fiscal deficit. But before he even takes office, the Government has already taken the first couple steps towards that goal: La Nación reported today that most ministries will see a reduction in the functional budgets they get to work with in 2017, with man receiving a budget increase that comes in well below the rate of inflation, and in some cases even having their budgets reduced.
First up to the chopping block — the executive branch’s budget which will be reduced by 0.5 percent. This doesn’t represent a major slash nominally, but considering the Government expects next year’s inflation rate to register at 17 percent, reducing the budget by even a small percentage instead of increasing it with inflation will carry a major impact. This is made all the more significant if we are to then consider projections made by private firms, some of which predict a 22 percent inflation rate for 2017.
Another sector which will have smaller budgets in both nominal and functional terms will be the Ministry of Energy. 17.9 percent less, to be specific. The number represents roughly AR $33.5 billion. However, the ministry (in theory) won’t need the percentage of these funds being cut, since they were set for to subsidizes energy costs, an expense citizens started paying again in part after the increases in electricity and gas bills earlier this year.
The ministries of Foreign Affairs, Security, Production, Agro-Industry, Communications, Science, Culture, Health and the Cabinet Chief will all see an increase in their budget which will, however, the bump in the budget still comes in lower than both inflation rates projected by the government and private consulting firms.
A similar scenario will take place in Congress, as its budget will increase by 11 percent. The Judicial branch will have to tighten its belt up even more, considering it will receive a measly 1.3 percent more money than the previous year.
In contrast, the Interior, Environment, Labor and Education ministries are the only departments that will receive an increase that trumps inflation next year. But among those, the Interior Ministry led by Rogelio Frigerio was clearly the winner. It has been allocated 52 percent more money compared to the previous year.
One possible explanation for this could be linked to the fact that this ministry is in charge of public works and housing. Macri intends to give both areas an important boost next year in order to help jump-start the economy and – well, why not – garner some popularity amongst voters ahead of next October’s key congressional elections.