At this point in the film, the enormous weight that Kirchnerism assigns to the state in its strategies of power and in the conservation of power, even if sometimes, too often, what they ostentatiously call the “present state” looks a lot like an absent state. Indeed, to a state above all functional to political goals.
The key to the model goes from one end to the other through the box, i.e. through a combo dominated by the large tax revenues that can be obtained, the tax burden at the top and, finally, public spending which reaches record levels.
All very exciting, except for a few details: as has happened and happens with other governments, Kirchnerism has the habit don’t save and spend thinking about the next electionshis forte is not the management or ordering of public finances and, of course, not always anything in money nor the economy accompanies.
This way of managing the State, which is also a way of understanding the State, emerges clearly in the data of a work by specialists recently published on the Alquimias Económicas website.
It reveals that in times of super soybeans at unprecedented international prices and withholdings pumping resources to pasture, total government spending has taken a historic leap.
it has gone from representing just over 13% of GDP in 2006 to 24% in 2015what is said to be a large rollout of funds that began at the end of the government of Néstor K. and spread between the first and second presidency of Cristina K.
As if not, if the implications of the move had not been fully understood, putting into today’s values those eleven percentage points of GDP gained as decided by power and by the objectives of power are equivalent to a long US $60,000 million or, if one prefers, at about 6,000 million dollars a year.
For added abundance, it’s worth adding the stark contrast to the $1.7 trillion below zero, in red, that marks the Central Bank’s net reserves. This is, what little remains of those super soy years in a place pierced by unpredictability.
Here we have another example of how Kirchnerism manages and values state resources. What follows sounds similar to what is called the Absent State.
During the boom years, when total spending rose to 24% of GDP, al public investment and infrastructure have never received more than a paltry 2.9% and that was for just two years of a series of 16 that began in 2007. Full Christianity Now, Lately Under the Reign of Fiscal Adjustment the series records 1% of GDP in 2020; 1.4% in 2021 and 1.6% last year.
In Latin America the average is around 2.8% and the recommended one for countries like Argentina is 4%.
A not rare rarity, with an undeniable smell of electoral propaganda, is the one in which the Minister of Public Works is the protagonist in this film. Contrary to the narrow panorama that the reports of his own government are beginning to show and feel himself, Gabriel Katopodis spends his time announcing investments non-stopgoes from opening to opening, sometimes three a day, and accumulates 67 acts since March.
Some functions were animated by Alberto Fernández, Axel Kicillof, Wado de Pedro, Minister Tolosa Paz and even Foreign Minister Cafiero. And there is never a shortage of mayors who enter the cast, obviously the majority of the Kirchnerist stick.
The point is that Katopodis’ efforts address a growing problem called adjustment, as was made clear in 43% real drop that last year hit the nation’s tours to the province and the cuts of 26% and 28%, also of the real type, which shake it in the first months of 2023.
Result: the works are paralysed, suspended or enter limbo, as the construction companies say. Houses, streets and environmental and urban hygiene works enter the flip. Also debts of the ministry itself with suppliers and contractors that are piling up.
Even so, the big card that Katopodis holds and is betting on is the weight of Buenos Aires within the Kirchnerist strategy, very evident in Cristina’s manifest decision to preserve and strengthen the power and political capital she has gathered there.
For now, the Province continues to receive large sums from a fund managed and administered by the Casa Rosada. It’s a mountain of silver that springs from an old K trick: underestimating estimated revenue in the national budget, especially tax collection. Therefore, only in the first quarter of 2023, the maneuver left no less than 284,700 million dollars free and available.
According to reports included in a work by the consulting firm Aerarium, the office of the always privileged governor Axel Kicillof has already received 107,000 million dollars, or 37.6% of the total. Part of a game known as the game of “discretionary transfers”, for the Autonomous City there was a modest 8% and an even more modest 5% and 6.5% respectively for Santa Fe and Chaco.
Where the tuning scythe cuts mercilessly is now in a package that was the centerpiece of the K model: the mountain of subsidiesparticularly electricity and gas, which have sustained very long periods of frozen tariffs and have in fact benefited high-income sectors more than low-income ones.
Data from official sources record years in which the bill for subsidies, especially indiscriminate ones, increased by 93%. 45 percentage points above inflation, and accounted for 4% of GDP or twice as much public investment. What category of state K does this borderline wasteful management of limited resources fall into?
There, once again and in fact, the role that the so-called capital expenditures have in the model is exposed.
Thus, key infrastructure investments in any development plan have landed on the shoulder: from roads, bridges and ports to renewable energy and railways. Those destined to attend basic services, absent or precarious, such as drinking water, sewage and sewage.
But since they are works of slow political payoff, something happens here that happens elsewhere: they are thrown forward and spent on what pays off quickly.
Meanwhile, some classic forms of underdevelopment continue to gain ground. And it can happen, incidentally, that capital expenditures are cornered by some adjustment program, whether it comes from the Monetary Fund or from the impossibility of continuing to maintain already unsustainable fiscal deficits.
Given the full picture and some of its aftermath, it’s hard to find where a tagline and commentary that Cristina Kirchner has snapped these days fits. And also where does she put herself, the vice president.
He said in one case: “It is essential, more than ever, to build a government program that makes Argentines and Argentines fall in love again.”
And in the following one he proposed “that the IMF allow us to develop our own program of growth, industrialization and technological innovation, otherwise it will be impossible to pay for it”.
Oddities, again. Cristina talks about building a government program when she has been in government for more than three years. And you are applying to the IMF after an agreement with the IMF that has already lasted a long year.
Source: Clarin
