PUCMM economy professor Federico Cuello comments today in El Caribe newspaper that while there is lots of talk about increasing government revenues there is little talk about improving the quality of government spending by making it more effective and progressive. ?Government spending is effective when it attends to social needs that the private sector cannot service,? he writes, saying more should be done with fewer resources. He sees that one way would be for the Fernandez government to offer public works at competitive public tenders. ?Commissions would disappear,? writes Cuello, and comments that this would contribute to diminish the fiscal deficit, while reducing the government demand for private loans, the interest rate and making more commercial bank money available for private investment.
Cuello instructs that government spending is progressive when it reaches those who most need it. In his opinion, investing in the poorer provinces or the slums of the big cities can mean fewer votes, but it is a fairer way of investing public funds.
He comments that wages paid to government employees account for more than 4% of the GDP and supports reducing the dimensions of government. ?Of the five new ministries, only the Ministry of Environment should be kept,? he writes, and the others should merge with other departments as their roles are not justified in the new economic order that free trade will bring.
Cuello also advocates a fiscal reform accompanied by austere government spending in order to strengthen the peso.