Javier Milei will be president of Argentina from this Sunday, December 10. The far-right, who won in the second round against Peronist Sergio Massa, will begin his mandate with an economy in ruins. He has promised a very tough adjustment, but to do so he will need the support of a Congress in which his party, La Libertad Avanza (LLA), is only the third political force. Resolving the debt of 44 billion dollars that Argentina has with the International Monetary Fund (IMF) will also be among his priorities.
Milei announced that he will privatize public companies and cut spending until reaching zero deficit next year. To contain the protests that she expects, she appointed Patricia Bullrich, defeated in the first round of the presidential elections, to the Ministry of Security. Bullrich held that same position during the presidency of Mauricio Macri (2015-2019). “Argentina needs order,” said the new minister.
These are the challenges that the new Government of Argentina will face.
Inflation and lack of dollars
Milei will have little time to control inflation, which this year will exceed 140%, without deepening poverty. The new president receives a country where 40% of its inhabitants do not earn enough for a decent life and 9.3% are destitute.
Inflation and its counterpart, poverty, are challenges that the last two presidents have faced without success. Mauricio Macri promised ‘zero poverty’; However, since he began his government in December 2015, he has increased inflation, the peso has collapsed, and unemployment has increased. Macri requested a loan of 44,000 million dollars from the IMF, a heavy burden that fell on the Government of Alberto Fernández. The situation worsened with the Peronist, who inherits from Javier Milei the worst economic crisis in 20 years. The peso loses its value against the dollar day by day and macroeconomic disruptions threaten the entire system. The Central Bank has its reserves in the red, imports are paid in dribs and drabs and the debt with the IMF is unpayable.
The markets have given their approval to the arrival of Milei, which promises a wave of privatizations and cuts to get out of the crisis. After backing down on his proposal to dollarize the economy, the new President has anticipated that economic reactivation will take “between 18 and 24 months.”
Governance and Congress
La Libertad Avanza (LLA), the political party founded by Milei just two years ago, will have only 38 of 257 deputies and seven of 36 senators. Far from any majority, he will be forced to negotiate support with parties that he has been accusing for months of being “the caste” that ruined the country. Milei chose the businessman and nephew of former neoliberal president Carlos Saúl Menem (1989-1999), Martín Menem, as president of the Chamber of Deputies.
The parliamentary majority in Argentina requires 129 deputies and 36 senators. Even adding the congressmen who respond to Macri would not reach the votes necessary to approve laws. The first majority in Congress will continue to be in the hands of Peronism, with 104 deputies and 32 senators, but Milei will be able to take advantage of the internal divisions of that movement to add allies. LLA also does not have its own governors in the country’s 24 provinces.
The debt with the IMF
In 2018, Argentina received a $44 billion IMF loan, considered the largest economic rescue in the country’s history. Alberto Fernández received the debt with the Fund in default and agreed after months of negotiations to make the payment conditions more flexible; Despite this, Argentina did not meet the deadlines in a timely manner and Milei will have to renegotiate them.
Milei chose the United States as her first international destination. She visited New York and Washington to “explain the economic plan” of her government to representatives of the International Monetary Fund (IMF), the World Bank and Joe Biden’s advisors.
Relations with Brazil and China
Milei promised a turnaround in Argentina’s diplomatic relations. During her election campaign, she rejected China as “communist” and called Brazil’s president, Lula da Silva, a “corrupt communist.” He thus attacked the country’s two main economic partners. After defeating Sergio Massa in the elections, Milei moderated his speech and invited the Brazilian president to vote for him as the new president. He rejected her. The person who will attend the Casa Rosada ceremony is former president Jair Bolsonaro. “My allies are the United States, Israel and the free world,” the new president said. Milei also had to back down from his statements against Pope Francis, whom he called “representative of the evil one on earth.”
Social protests and mobilizations
Social mobilizations could become the main obstacle for Milei to carry out its reforms. To respond to any demonstration, the President appointed Patricia Bullrich as his Minister of Security. In 2017, when she was Mauricio Macri’s Minister of Security, Bullrich applied a heavy hand against all types of protests.
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