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article imageTensions as Argentina's lower house passes austerity budget

By Nina NEGRON (AFP)     Oct 25, 2018 in World

Lawmakers in Argentina's lower house of Congress on Thursday approved an unpopular austerity budget designed to meet the stiff requirements of a $57 billion International Monetary Fund bailout.

The final pre-dawn vote came after a marathon, rancorous debate and a day of unrest that saw police fire tear gas and rubber bullets at demonstrators throwing rocks outside the legislature building to protest a bitter cocktail of tax increases and spending cuts.

Factions of the leftist opposition backed President Mauricio Macri's center-right Cambiemos coalition to pass the bill in a 138-103 vote with eight abstentions.

The draft now goes to the Senate, where it is expected to win final approval.

Quarterly changes in Argentina's GDP from Q1 2017 to Q2 2018
Quarterly changes in Argentina's GDP from Q1 2017 to Q2 2018
Jonathan WALTER, AFP

Unions and the leftist opposition have criticized Macri's program of sweeping spending cuts to meet the deficit reduction requirements of the IMF loan, originally approved in June before being increased at Macri's request this month.

The budget left a bitter taste on the streets and further protests are expected.

"The same deputies and senators should start cutting their own budgets, because we have had to take cuts for health and schooling," said retired construction worker Orlando Cesar.

The bailout is supposed to help Argentina recover from an economic crisis that has seen the peso lose half of its value this year.

Inflation is forecast to finish the year at 40 percent and the economy is expected to shrink by 2.6 percent.

- 'In crisis' -

Demonstrators throw stones with slingshots at riot police outside the Congress while Argentine Deput...
Demonstrators throw stones with slingshots at riot police outside the Congress while Argentine Deputies began the discussion on the government's austere 2019 budget, in Buenos Aires
EITAN ABRAMOVICH, AFP

"We are in a crisis and the government must take responsibility. Social problems and the recession oblige us to pass the law," Cambiemos party lawmaker Mario Negri said in a speech after the budget passed.

"To have no budget would be a defeat for the country," he added.

Macri has pledged a swathe of cuts in health, education, science, transportation, public works and culture to the tune of $10 billion.

During a fraught day Wednesday, demonstrators outside the legislature shouted "No to the IMF budget. Don't cut our future!" while inside, tempers ran high as lawmakers traded insults ahead of the vote.

Nine police were injured in the clashes, authorities said, while 26 demonstrators were briefly detained.

"This is a prejudicial budget for the nation and we are not employees of (IMF chief) Mrs (Christine) Lagarde or President Macri -- we are representatives of the people," Agustin Rossi of ex-president Cristina Kirchner's Front for Victory party said after the vote.

A protester carries the Argentine flag outside the Congress -- Buenos Aires is trying to cut Argenti...
A protester carries the Argentine flag outside the Congress -- Buenos Aires is trying to cut Argentina's fiscal deficit and tame inflation at the IMF's behest
Eitan Abramovich, AFP

Street protests have reflected growing public anger after Macri slashed traditionally-safe civil service jobs as part of a bid to cut Argentina's fiscal deficit and tame inflation at the IMF's behest.

The budget deficit was 3.9 percent of GDP last year. The government aims to get it down to 2.7 percent in 2018 and zero by the end of next year.

To halt the collapse of the peso back in April, Macri's government reached a bailout deal with the IMF, with which Argentina had practically severed relations after defaulting on its foreign debt in 2001.

- Street demos -

Analysts say a default is less likely this time but they are concerned about Macri's ability to both push through the measures demanded by the IMF and hold onto power in next year's general election.

"Everything that is not social spending has been cut back, fiscal policy is already having spillover effects, and the idea of that deepening in an election year is a novelty," Matias Carugati, analyst at Management and Fit, told AFP.

The austerity plan faces stiff opposition in Argentina, where strikes and demonstrations have become the norm over the past few months, amid falling income and increased poverty.

A demonstrator in Argentina fires a  slingshot at riot police outside Congress ahead of a vote in wh...
A demonstrator in Argentina fires a slingshot at riot police outside Congress ahead of a vote in which lawmakers approved an austerity budget
EITAN ABRAMOVICH, AFP

More than 27 percent of the population are listed as living below the poverty line, and the South American country has an unemployment rate of 9.6 percent.

Opposition leaders condemned Wednesday's street violence, saying extremists had infiltrated orderly demonstrations.

Dozens of people broke away from the main union demonstration to attack the police protecting the legislature.

Smashing concrete park benches, they lobbed debris at the police using slingshots, set rubbish containers on fire and used homemade weapons to send fireworks rocketing directly at police cordons.

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