Argentina’s Milei Pledges To Speed Up ‘Shock’ Policies To Save Country’s Economy

Argentina’s newly elected president, Javier Milei, a self-described “anarcho-capitalist” and libertarian, is charging ahead with bold reforms to rescue the nation’s ailing economy.

Upon assuming office in December, Milei inherited a staggering 140% inflation rate, widespread poverty, and a daunting debt of hundreds of billions. “They have ruined our lives… There is no money!” Milei declared during his inauguration speech.

Despite facing opposition from lawmakers and grappling with a persistent inflation rate that has plagued the country for years, Milei’s assertive measures, labeled as “shock” adjustments, have instilled newfound confidence in both the domestic and international markets, the Daily Caller reported.

Late last year, Milei allowed the value of the peso to plummet by 50% aiming to decrease export costs and increase import costs, thereby closing the trade gap and bolstering Argentina’s global competitiveness. 

His long-term plan includes replacing the peso with the U.S. dollar, a commitment made during the campaign, citing the dollar’s stability and prolonged value.

Temporary tax hikes were implemented by Milei’s administration to address the national debt and achieve a balanced budget, with the current budget deficit standing at 3%. The president has pledged to eliminate this deficit in the current year.

Milei emphasized the necessity of “shock” adjustments as the last resort for initiating the reconstruction of Argentina, acknowledging that the economy would temporarily worsen during this process.

One of Milei’s initial moves as president involved reducing the bureaucratic ministry from 18 to nine, fulfilling a campaign promise to trim government spending. 

The Ministry of Transportation and Public Works, Tourism and Sports, and the Ministry of Environment and Sustainable Development, two allegedly ineffective and cash-laden agencies, were absorbed by other existing ministries.

U.S. Secretary of Treasury Janet Yellen acknowledged Milei’s administration’s efforts during a late February press conference, commending the steps taken toward fiscal sustainability, exchange rate adjustment and inflation control.

Argentinian citizens have deposited over $2.3 billion in dollar-denominated banks since Milei assumed office. This not only replenished the entirety of the banks’ losses from the past year but also served as a compelling indicator of the population’s perception of stability. Bloomberg notes that such deposits are noteworthy, especially when withdrawals typically surge during uncertain times.

Despite these positive signals, Milei faces challenges, with inflation and poverty persisting in Argentina. In February, Congress blocked key provisions in Milei’s reform bill, leading him to brand the legislative body as a “nest of rats.”

Unfazed, Milei pledged to “speed up” his reform plans in a March 1 address to Congress. “We won’t back down; we’re going to keep pushing forward—whether that’s by law, presidential decree, or by modifying regulations,” he said.

In response to setbacks, Milei’s government contemplates splitting the reform bill and presenting individual provisions to Congress.

Additionally, Milei calls for lawmakers to agree to a 10-point social pact, including economic reform discussions, by May 25, signaling resolute determination to overcome challenges and achieve objectives.

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