ABSTRACT
This chapter argues that control over public spending in a context of austerity is at the heart of the Secretaria de Programacion y Presupuesto (SPP) becoming the most powerful ministry. It focuses on the application of the austerity programme, on the contextual factors hampering its application, and on the mid-term deterioration of the government’s relationships with the domestic and foreign capital. The chapter explores the broad causes of the 1986 policy shift towards market policies and on the bureaucratic and political factors involved. It also explores the immediate effects of austerity on the presidential succession, and the participation of the SPP in the process. The unprecedented severity of the 1981-82 economic crisis reduced considerably the policy options of the incoming administration. A highly centralized economic apparatus was used to put into practice the adjustment economic programme. Restraining public expenditure in a context of big government and scarce resources was the major challenge to the SPP.
