Argentina started 2024 with inflation of 20.6% in January. After the country closed 2023 with a price increase of 211.4%, the highest rate in the world, surpassing Lebanon and Venezuela, year-on-year inflation reached 254.2% in January. The globally unprecedented price increase in January marked a slowdown of almost five points for Argentina compared to December, which reached 25.5% – a record in 30 years – in a month marked by the presidential transition.
Inflation data for the first month of a Javier Milei-led government alone reflects price increases following the liberalizations and devaluations imposed by the new government in mid-December. Goods and services have increased by 40%, transportation by 26% and both health and food have exceeded 20%. The Argentine government, which completed two months in office last week, is “very enthusiastic” about the work it has done to combat inflation, presidential spokesman Manuel Adorni said on Wednesday, noting that “obviously there is still “It's a long road.” According to the index, which measures the salaries of formal workers – just over half of working-age Argentines – Argentines' purchasing power fell 13% in December alone, the worst since 2002. The index carries six years of decline, while The minimum wage in Argentina today is about $150, making it the worst in the region, ahead only of Venezuela.
Argentina is facing a bad start to a year marked by unknowns. Javier Milei's government suffered its first political defeat last week when it withdrew from Congress its major state dissolution bill, which was doomed to fail in the vote. The nearly 400-article text was broadly approved by a section of the opposition that recognized the urgency of the reforms, but failed to vote on each article individually. When MPs sat down for a discussion on February 6 and rejected half of the first 13 reforms, the ruling party decided to suspend the discussion and Milei launched a witch hunt, pointing out MPs one by one who were ready to negotiate had put together. the law, but they refused to sign him a blank check and give him special legislative powers in private voting.
From Rome, where he had just arrived on an official visit, Milei presented his defeat as antagonism between his government and this “political caste” that “the only thing it does is to maintain the status quo in exchange for personal deals.” to guarantee”. “They have to decide which side they are on. Argentinians already know which side we are on and we will sue them,” he wrote in a tweet on February 9. It was his most institutional response after days of anger in which he disseminated photos and data of wayward lawmakers and spread insults from his supporters toward other political parties on social networks. Feeling betrayed by provincial forces that had let go of his hand in Congress, Milei last week fired officials such as the mines minister and the director of the Social Security Administration because of their political ties.
Legislative blocs such as the center-right Radical Civic Union or the federal independents, grouped in a grand coalition, have endured weeks of insults from the president to negotiate the reforms. Sandwiched between the new far-right government and a Peronist-led opposition, these blocs, despite the abuses, preferred to negotiate so as not to be stuck with the rejection of the law by the Peronist opposition, which has just lost the elections.
With the failure of the law and after the end of the extraordinary sessions of Congress, which will suspend the assemblies this Thursday and begin their official calendar in March, the major reform of the new Argentine government is in the air. Milei has threatened to seek passage of his law through a referendum, backed by the 56% of votes with which he won the presidency in a second round last November, but the path his reforms will take is today uncertain.
The moment gave vent to the opposition. This Wednesday, after more than half a year of silence, the former President (2007-2015) and Vice President of the last Peronist government (2019-2023), Cristina Kirchner, returned to the public stage with a monograph in which she explains that Argentina facing “its third debt crisis” in 40 years of democracy and Mileis opposed fiscal measures, pointing out that the country's inflation crisis was not a product of the budget deficit but of dollar debt. According to the last great leader of Peronism, Milei's only plan is “destabilization, which will not only set back the inflationary spiral and bring society to the brink of shock, but will also inevitably lead to an increase in unemployment and social despair.” planned chaos.” “It is more than obvious that in the resident's mind the only stabilization plan is dollarization. “The measures adopted are not explained in any other theoretical framework,” wrote the former president, who, however, opened discussion of some reforms.
“We agree that Argentina needs to review the capacity of the state and that the slogan of the 'current state' is not enough to solve the country's problems, which are too numerous,” Kirchner wrote, echoing the new government before , the need for a “work update”, “tax simplification”, discussion of the “integration” of private capital into state-owned companies and a “rethink” of the public health system. However, Kirchner put a red line on dollarization. It's not the only one. According to a large part of the opposition, it is Milei's only plan in the face of a crisis that added another wound this Wednesday.