Analysis 11-07-2018

Macri decides to freeze workers' contracts until 2020

The president of Argentina, Mauricio Macri, stopped the process of designating or hiring personnel throughout the public Administration until December 2019.

ThroughDecree 632/2018, which has been published on Tuesday in the official newspaper of Argentina, Macri freezes income to the State's payroll until December 31, 2019, when the president would end his duties; which means that contracts will not be renewed to about 6000 officials.

In accordance with the governmental provision, the implementation of technical assistance agreements, as well as the delivery of bonuses or prizes, a cut in mobility and per diem expenses is prohibited, as well as a 30% reduction in travel expenses and expenses in trips abroad, official cars, tickets in business class.

"The quality of public management depends on compliance with the principle of economy, that is, that the operation of the public administration encourages the rational use of public resources," reads the considerations of the decree.

With this provision, the Administration of Macri seeks a reduction of 25 billion dollars to comply with the agreement reached with the International Monetary Fund (IMF), that to grant a credit of 50 billion dollars in three years, Argentina undertook to reduce its fiscal deficit from 3.2% to 2.7% of the Gross Domestic Product (GDP) in 2018 and to 1.3% next year.

The president issues this decree, a day after admitting that Argentina is experiencing an economic and financial " storm " that is the result of many circumstances, including issues of our own management, external markets and policies adopted by previous governments.

On Monday, the Argentines went massively into the streets to protest against the government's economic policies, which have also generatedcriticismamong lawmakers who consider them a "serious setback."

Despite receiving the aforementioned loans from the IMF, the Argentine economy is experiencing an alarming situation due to the high rate of inflation (around 30% annually), the depreciation of the Argentine peso around 20% and a decrease of more than 12,000 million of dollars of monetary reserves.

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