Javier Milei was sworn in today, Sunday, December 10, 2023, making him officially the new President of Argentina. In his first speech, he warned that “the money is missing” and that “shocking reforms will therefore be necessary immediately.” And not only that: “In the short term, things will get worse for the economy,” he said, and “I will have to make all the necessary decisions.”
“Today begins a new era of peace and prosperity,” he said, “of growth and development, of freedom and progress.”
“To lift the country out of the deep economic crisis, the Argentine government,” which has suffered “the worst fiscal legacy in history,” must implement a deep austerity plan. The country is currently suffering from a “deficit of 17 percent of gross domestic product, of which 5 percent is at the Ministry of Finance and 10 percent at the Central Bank.” It is therefore necessary to carry out a fiscal maneuver in the public sector for about 5 points of GDP. A maneuver that this time will be almost exclusively the responsibility of the state and not the private sector.”
Milei also brought back the idea of “putting an end to the issuance of money and thus the only theoretically and scientifically proven cause of inflation.” But because monetary policy takes effect “with a lag of 18 to 24 months, even if we stop spending today, we will continue to bear the cost of the disaster left by the outgoing administration.” The spending of money for 20 percent of GDP costs not zero.”
Milei's program
Milei won the elections by clearly defeating the Peronist Sergio Massa in the runoff (55.69% versus 44.30%) and – as Aldo Cazzullo wrote here – “the revolt against the elites, the establishment, the institutions, the traditional “mixed parties, even the central bank, with an economic hyper-liberalism that could revitalize the country but also deal it the final blow.”
“We are entering an unknown geography,” said historian and journalist Carlos Pagni to Sara Gandolfi: “Milei is a candidate without structure who only five years ago established himself as a public figure by defending ultra-liberal ideas and using the slogan “Everyone” carried out” . How will you translate these slogans into reality?”
His program promises to reduce tax pressure, increase labor flexibility and cut public spending by at least 15% through a drastic reduction in the number of public servants and the welfare state.
His prescription for inflation, which has reached 142%, is draconian: He wants to “dollarize” the economy – using Nayib Bukele's El Salvador as an example – and abolish the central bank.
According to the program, the new government will consist of very few ministries: Interior, Economy, Infrastructure, Justice, Security, Defense, Foreign Affairs and Human Capital. In parliament, Milei's libertarian formation – La Libertad Avanza – can only count on 38 deputies and seven senators, almost all of whom are having their first experience in legislation and therefore have to negotiate with the other parties.
Milei's toughest opponents will be the squares. The unions are already at war, as are civil servants who fear draconian job cuts. Human rights defenders and feminists are also ready to raise their shields if the new government tries, as announced, to liberalize the carrying of weapons, abolish abortion laws or reduce sentences for soldiers convicted of genocide.
Article is being updated…