A government that decides to do away with half it civil servants would not appear to be thinking straight. Government departments generally exist for a purpose. They spend taxpayers’ money discharging the responsibilities in their portfolio. These might be an Industry Ministry charged with the oversight of manufacturing and productive industries, making regulations and offering incentives to promote growth. A Social Services Ministry must administer a welfare system and a Pensions Ministry the care of the retired, including probably the rules that govern the investment of the pensions pots build up when people are still in employment.

It is not yet clear which ministries Argentina’s beleaguered President Mauricio Macri intends to shrink so radically but it is equally hard to see how, even if they are scandalously overstaffed, firing thousands of civil servants will help the country’s failing economy which has seen the peso collapse against the dollar, rapid inflation and interest rates passing 60 percent. Not only will the facilities they provide the public be severely curtailed but the saving on the wages and the day-to-day costs of a government ministry is likely to have only a marginal impact on the struggle by Macri’s administration to cope with its ballooning budget deficit.

As much as anything, the government’s problems stem from a collapse in both market and public confidence. Macri was elected in 2015 with a promise to reform a dysfunctional economy. But not only did he set about the task with what he now admits was undue caution but his administration, an increasingly uneasy coalition, made a very bad fist of communicating its programs, of keeping in touch with the man in the street. This was all more necessary in the light of the crippling debt crisis of 17 years ago when Argentina was forced into the-then largest-ever sovereign debt default and the International Monetary Fund (IMF) intervened, insisting on austerity measures the pain of which has by no means been forgotten.

This May, Macri was again forced to turn to the IMF and agreed a plan to bring the budget deficit down to 1.3 percent of GDP. Not surprisingly, public confidence nose-dived along with the value of the peso though the country has not yet seen a repeat of the 2001 catastrophic run on the banks. The president’s televised announcement this week that he now intended to exceed the agreed IMF target and actually balance the budget next year with a 1% focus in 2020 has been met with incredulity. Part of this new government income will come from the reimposition of a tax on key exports. This is a high-risk strategy since by making export less competitive, it is likely to undermine the country’ all-important foreign currency income.

Macri was elected on a promise to liberalize the economy and reverse the nationalizations and subsidies during 14 years of socialist Peronista rule by his predecessors Nestor and Cristina Kirchner. He himself admits that he now moved too slowly in this. Facing re-election next year, his radical measures look as much like panic as finally implementing the reforms on which he was elected. The concern must be, not only that he is acting too late, but that with Venezuela and Brazil already wallowing in financial chaos, Argentina’s economic contagion could spread to the rest of South America.