Labor unions across Argentina are striking following a US$50 billion loan from the International Monitory Fund (IMF), which might lead to the imposition of harsh austerity measures.
Trains, buses, and the underground systems were stopped in Buenos Aires on Monday, as activists blocked access roads to the capital.
The unions say that the austerity measures demanded by the IMF will bring hardship. Therefore, they are seeking a rise in pay, arguing that their salary should be increased in line with inflation, which is hovering at a staggering 27% and could rise to 30% by the year’s end.
Argentina’s economy was in fact improving commendably in recent months, but now that the United States has begun raising interest rates, the country’s currency, the peso, has been hit hard.
To stem the plunge of the peso and the soaring inflation, Mauricio Macri’s government decided to borrow money from the IMF. The international bank is hated by Argentines because it brings back memories of the economic crisis that inflicted the country when it defaulted on loan repayments 17 years ago.
Moreover, labor unions are accustomed to subsidies and generous social welfare programs. Macri has scrapped many subsidies his predecessors had granted on a variety of services, most notably electricity, gas, and water. With the IMF agreeing to the loan, many in Argentina are expecting the government to slash more such subsidies.
Some reports say the international bank has asked Argentina to slash the fiscal deficit to 1.3% in 2019 from more than 3% last year –– a target that will obviously involve heavy budget cuts and increase unemployment in the public sector.