Newly Appointed President Of Argentina, Milei, Issues A Shock Adjustment To The Country's Economy

President of Argentina, Javier Milei

Javier Milei, the recently sworn-in president of Argentina, has issued his first executive order cutting the number of government ministries from 21 to 9

Argentina's Buenos Aires (AP) - Not the most inspiring of inaugural speeches, I thought. Instead, the recently elected president of Argentina, Javier Milei, provided data that revealed the extent of the country's economic “emergency” and attempted to get the populace ready for a drastic reduction in public spending.

“We don't have alternatives and we don't have time. We don't have margin for sterile discussions. Our country demands action, and immediate action. The political class left the country at the brink of its biggest crisis in history,” he said in his inaugural address to thousands of supporters in the capital, Buenos Aires.

“We don't desire the hard decisions that will be need to be made in coming weeks, but lamentably they didn't leave us any option.”

The second-biggest economy in South America is experiencing annual inflation of 143%, a collapse in the value of the currency, and 4 out of 10 Argentines live in poverty. The country faces a massive fiscal deficit, a $43 billion trade deficit, and a crippling $45 billion debt to the IMF, of which $10.6 billion is owed to private and multilateral creditors by April. “There's no money,” is a recurrent refrain from Milei. On Sunday, he reiterated it to clarify why taking a gradualist approach to the situation—which would require funding—was not a viable choice.

However, he assured that the change was the first step toward restoring prosperity and that it would almost entirely impact the state rather than the private sector.

“We know that in the short term the situation will worsen, but soon we will see the fruits of our effort, having created the base for solid and sustainable growth,” he said.

Milei, 53, became well-known on television for his foul-mouthed tirades against the political caste. He quickly converted his popularity into a congressional seat and then into a presidential campaign. The self-declared “anarcho-capitalist” shocked the political world and completely turned the race around with his resounding victory in the August primaries.

Disappointed with the status quo of their economy, Argentines were open to the wild suggestions of an outsider to solve their problems and change the country. He soundly defeated the Peronist political machine that ruled Argentina for decades when he emerged victorious in the election's second round on November 19. Nevertheless, he is likely to face strong resistance from the legislators and unions controlled by the Peronist movement, whose members have declared they will not forfeit their pay.

Milei was sworn in earlier on Sunday inside the National Congress building, and the presidential sash was placed on him by outgoing President Alberto Fernández. A few legislators in attendance chanted “Liberty!”

After that, he flouted convention by addressing his supporters outside of the legislature rather than the gathered lawmakers during his inaugural speech, turning his back on the legislature. As the economy stagnated, he blamed the departing government for setting Argentina up for hyperinflation and declared that the political class “has ruined our lives.”

“In the last 12 years, GDP per capita fell 15 percent in a context in which we accumulated 5,000 percent inflation. As such, for more than a decade we have lived in stagflation. This is the last rough patch before starting the reconstruction of Argentina,” he said. 

“It won't be easy; 100 years of failure aren't undone in a day. But it begins in a day, and today is that day.”

Milei's message was generally bleak, so the audience listened intently and cheered only sporadically. Many waved Argentine flags and, to a lesser extent, the yellow Gadsden flag, which Milei and his supporters have adopted and is frequently associated with the American libertarian right.

“Economically, we are just like every Argentine, trying to make it to the end of the month,” said Wenceslao Aguirre, one of Milei's supporters. 

“It's been a very complicated situation. We hope this will change once and for all.”

While running for office, Milei made promises to abolish corruption within the political establishment, abolish the Central Bank, which he claims is printing money and causing inflation, and swap the rapidly declining peso for the US dollar.

But after winning, he seemed to have shelved his much-discussed plans for dollarization when he appointed former Central Bank president Luis Caputo as his economy minister and one of Caputo's allies to lead the bank.

Much like former US President Donald Trump, whom he publicly admires, Milei had positioned himself as a willing warrior against the advance of global socialism. But instead of going to Mar-a-Lago during his recent visit to the United States, Milei had lunch with Bill Clinton, another former American president.

The Argentine newspaper La Nacion revealed that, in spite of his adamant denial of humanity's role in global warming, he sent a diplomat with extensive experience in climate negotiations to the current COP28 conference in Dubai. Furthermore, he retracted his intentions to disband the country's health ministry.

Also, he addressed the political elite in part of his inaugural speech, declaring that he would “receive with open arms” any politician or union leader who wishes to support his project and that he has no desire to “persecute anyone or settle old vendettas.”

His moderation may be the result of pragmatism, considering the enormity of the task at hand, his lack of political experience, and the necessity of forming coalitions with other parties in order to carry out his agenda in Congress, where his party is a distant third in terms of seats held.

He appointed Luis Petri, Patricia Bullrich's running mate, as his defense minister and Bullrich, a longtime politician and first-round rival from the coalition with the second most seats, as his security minister.

However, there are indications that Milei has not abandoned his ambitious schemes to topple the government. He has already declared that he will dissolve several ministries, such as those dealing with women, science and technology, the environment, and culture. His goal is to combine the departments of labor, education, and social development into a single ministry of human capital.

Milei drove to the presidential residence in a convertible after giving his inaugural speech. He will meet with foreign dignitaries and swear in his ministers later on Sunday.

Following his statement last month in a televised interview that the leftist was “obviously” corrupt and that the two would not meet if he became president, Milei reportedly sent a letter inviting Luiz Inácio Lula da Silva, the current president of Brazil.

Lula sent his foreign minister to the inauguration of Milei.

Volodymyr Zelenskyy, the president of Ukraine, also joined. This is not the first time Zelenskyy has visited Latin America; he is traveling there as part of Kyiv's efforts to garner support from developing countries for its 21-month-long defense against Russian forces. A brief conversation between Zelenskyy and Milei preceded the inaugural speech.