Javier Milei, A 53-year-old libertarian economist yesterday warned Argentines that “it will be necessary to make a tough fiscal adjustment” that will involve sacrifices and that the country needs a economic “shock” that in the end “will bear fruit.” The statements were made by him just after assuming the presidency during a speech on the esplanade of the Congress in Buenos Aires.
“There is no money, there is no alternative to adjustment, there is no alternative to shock,” Milei exclaimed before thousands of people who gathered to listen to his first presidential speech.
The president admitted that the shock plan that he will apply will have a negative impact on the level of activity, employment, real wages and the poverty and indigence rate.
“There will be stagflation, it is true, but it is not something very different from what has happened in the last two years,” he said.
In addition, he confirmed that he will apply a fiscal adjustment of 5 percent of GDP which, he promised, will fall “almost entirely” on the State and not on the private sector.
Oblivious to traditional politics, which he disparagingly refers to as “the caste,” the president chose to make his speech outside the parliament grounds to a crowd of supporters and guests.
Among them were several leaders such as the Chilean Gabriel Boric and the Paraguayan Santiago Peña, the Ukrainian Volodimir Zelenski and the Hungarian Viktor Orban, as well as the king of Spain, Felipe VI.
At his swearing-in, he followed protocol and swore “by God and country on these holy gospels.” He then received the sash and baton from the outgoing president, Alberto Fernández. Next to her, the vice president, Victoria Villarruel, took the same oath.
Then, the president went to the Casa Rosada (seat of the Presidency) to greet those who were in the Plaza de Mayo.
The truth is that Milei assumes the reins of an Argentina with a battered economy that registers an annualized inflation of more than 140 percent and a poverty rate of more than 40 percent.
To face this crisis, Milei proposes drastic measures to cut public spending, reduce the State and liberalize in a country accustomed for years to subsidies and deficits.
“No government has received a worse inheritance than what we are receiving,” he added.
He also confirmed that he will “clean up” the liabilities of the Central Bank and will put an end to monetary issue, which in his opinion is the cause of Argentina's high inflation. He also signed a decree to reduce the number of ministries, from 18 to only nine.
La Libertad Avanza, Milei's party, is only the third minority in Congress, which forces it to reconcile many of its reforms with the other political forces. The president has, however, freedom to decide on a devaluation of the peso and some spending reduction measures. Dollarization or the closure of the Central Bank, central themes of his campaign, were put on hold pending the first results of his economic plan.
“The first litmus test for the president will be to decide if he is actually going to stop the issuance (of money) or if he adopts a more pragmatic stance and leaves the goal of non-issuance for later,” commented economist Víctor Beker. Finally, on the Colombian side, Foreign Minister Alvaro Leyva attended, who shook Milei's hand and it was a sober rapprochement between the new president and the Colombian Government.
*With AFP and Efe
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