Argentina Holds Breath For Milei's Economic Reforms

Argentina's President Javier Milei held his first cabinet meeting on Monday as the new government prepares to unveil its first austerity measures to tackle the country's profound economic woes, including triple-digit inflation

Buenos Aires, (APP - UrduPoint / Pakistan Point News - 11th Dec, 2023) Argentina's President Javier Milei held his first cabinet meeting on Monday as the new government prepares to unveil its first austerity measures to tackle the country's profound economic woes, including triple-digit inflation.

The first economic measures "will be announced on Tuesday by Economy Minister Luis Caputo," said government spokesman Manuel Adorni.

The Central Bank said in a statement that the exchange market would function as normal to give the new government time to "announce and implement the policies that they will carry out."

The 53-year-old Milei, a libertarian and self-described "anarcho-capitalist," met with his nine cabinet ministers after slashing nine portfolios in one of his first government cuts.

He took office on Sunday with a stark warning to citizens to steel themselves for painful belt-tightening measures.

Once one of the richest countries in the world, Argentina has stagnated in recent decades, unable to escape cycles of fiscal crises marked by debt, financial mismanagement, and inflation which now stands at 140 percent year-on-year.

"There is no money," said Milei, vowing to put an end to "decades of decadence" by his overspending predecessors who he said had left him "the worst inheritance" of any prior government.

Among the questions hanging over Argentines' heads in the coming days will be whether Milei will devalue the strictly controlled peso.

Currency controls introduced in 2019 have birthed a multitude of dollar exchanges in the country.

Asked about coming changes to the exchange market, Adorni said: "I don't do futurology."

He drove home Milei's message, saying the country was in a "state of emergency" and that fiscal reorganization "will be the priority.

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"Spending more than you have is over, it is not a cliche to say 'there is no money.' The fiscal balance will be strictly respected," said Adorni.

"Complicated times are coming."

- Fears over public jobs -

In his debut speech, Milei warned of spending cuts equivalent to five percent of gross domestic product in a country where millions receive welfare handouts and have become accustomed to hefty energy and transportation subsidies.

Adorni sought to appease fears about massive cuts to the public sector which provides more than 18 percent of all Argentine jobs -- employing some 3.4 million people, according to the Cippec thinktank.

"The public employee must be valued. The majority of people who work for the State are valid and necessary," he said. "What we are going to combat is... political employment that does not contribute anything."

Milei swept from obscurity to the presidency only two years after entering politics, seizing upon deep voter disenchantment with repeated cycles of economic crisis.

He fired up voters with rants against the "thieving political caste" and his vows to "dynamite" the Central Bank and ditch the peso for the US dollar -- all while waving around a powered-up chainsaw to symbolize his planned cuts.

However, he has watered down many of his fiery stances since being elected in November.

His fledgling party has little power in Congress however, and he has been forced into an alliance with the center-right opposition, several of whom have been appointed to his cabinet.