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Javier Milei: these are the challenges facing the new president of Argentina

Javier Milei is the new president of Argentina. The libertarian has the challenge of reviving a ruined economy, although his announcements of severe adjustments generate fear in a large part of society, which is highly dependent on state aid through social benefits.

Milei53 years old, replaces the Peronist Alberto Fernández and becomes the first economist in the country’s history to occupy the Presidency, which he achieved just two years after the founding of his party. Advances of Freedom.

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He libertarian He now has four years to fulfill the promises he intends to make Argentina “big again.”

Archive photograph dated November 19, 2023 showing the elected president of Argentina, Javier Milei, during his speech in the electoral “bunker” after learning the results of the second round. (EFE/ Juan Ignacio Roncoroni/FILE). (Juan Ignacio Roncoroni/)

One of its main campaign offerings, dollarize the economy, will have to wait, as once elected he stated that the measure will not be automatic because the country first needs to raise billions of dollars. He said he will get the money through strong fiscal adjustment, spending cuts and privatization of public companies.

O objective of Milei with its first measures it intends to achieve the objective of zero deficit in one year.

These are the challenges of the new president of Argentina:

Milei receives a country with annual inflation of 140%, one of the highest in the world, which is heading towards 180%. While poverty is above 40% and indigence at 9.3%.

The libertarian, once elected, specified that “Reducing inflation will take between 18 and 24 months.” He also said that as long as this objective is achieved, in the country “there will be stagflation”, a term that defines an economy without growth and inflation.

Inflation in Argentina.  (AFP).

Inflation in Argentina. (AFP).

Poverty in Argentina.  (AFP).

Poverty in Argentina. (AFP).

The cuts he plans Milei for public expenditure they are estimated at 15 points of GDP.

He also announced a State reform, elimination of subsidies and stoppage of public works.

The day after his victory in the November 19 second round, Milei confirmed that he will privatize state-owned companies YPF, TV Pública, Rádio Nacional, Télam, among others. “Everything that can be in the hands of the private sector will be in the hands of the private sector”, she assured.

According to data from the Ministry of Economy, Argentina has a total of 33 companies public.

Argentina It is the only country in Latin America whose public companies have a operational deficit, according to consultancy Inveq, cited by the El Economista portal. These companies closed the 2022 financial year with an operational deficit of 4,848 million dollars0.75% of GDP.

O dollarization of the economy was the strongest proposal Milei, but after being elected he clarified that he will not promote him immediately. The reason? Argentina You need to have between 30 billion and 35 billion in your coffers to take this step.

“The idea is that we can apply it in one year. It will be much easier when the improvement in fiscal numbers starts to be noticed,” he declared. Milei when talking about deficits in public finances.

Sergio Morresi, PhD in Political Science from the University of São Paulo, told the AFP agency that in economics, Milei “seems to follow a longer pathbut with the same goalsin part because it does not have the political capacity to do otherwise.”

While the other radical promise, eliminate the Central Bank, it will not be automatic either. “We never said it would be instantaneous,” said Milei once elected.

Javier Milei holds a giant US$100 bill with his face painted on it during a campaign rally in San Martín, Buenos Aires province, Argentina, on September 25, 2023. (Photo by Luis ROBAYO/AFP).

Javier Milei holds a giant US$100 bill with his face painted on it during a campaign rally in San Martín, Buenos Aires province, Argentina, on September 25, 2023. (Photo by Luis ROBAYO/AFP). (LUIS ROBAYO/)

At the CongressFreedom Advances, Milei’s party has just 38 of the 257 deputies and seven of the 36 senators. In other words, the majority is not enough to fulfill many of the president’s promises, such as the privatization of public companies.

Thus, as the Spanish newspaper El País says, Milei is forced to negotiate the support of parties that he has accused for months of being “the caste” that ruined the country.

Already before the second round Milei He addressed parties like Together for Change, which brought Mauricio Macri to power (2015-2019). Your future Minister of Economy, Luis Caputowas in the office Macrithe same as Patricia Bullrichappointed Minister of Security, her old rival in the first electoral round and a fundamental ally for the victory in the second round.

“That he would need alliances due to the lack of legislative flow and the absence of technical and political personnel is something that even his electorate seems to accept,” Morresi told AFP. The analyst sees his approach to Macri as a sign “of political skill rather than agenda transformation”.

It should be noted that inside Together for Change There were those who were uncomfortable with the alliance with Milei, such as the historic União Cívica Radical (UCR) party.

In 2018, during the government of MacriArgentina received a loan of International Monetary Fund (IMF) of 44 billion dollars, considered the largest economic rescue in the country’s history.

Alberto Fernández received the defaulted debt from the IMF and agreed, after months of negotiations, to make payment conditions more flexible; Despite that, Argentina failed to meet deadlines in a timely manner and Milei You will have to renegotiate them.

At the time Argentina It has debt maturities with the IMF in the amount of 10.6 billion dollars to be paid by April 2024.

The day after the victory of Mileithe managing director of the IMF, Kristalina Georgievacongratulated the president-elect on Twitter and informed that he had contacted his team to begin negotiations.

A week later, Milei traveled to the United States with his Economy Minister, Luis Caputo, and his chief of staff, Nicolas Posse. The two responsible met in Washington with the managing director of the IMF, Gita Gopinathto “better understand the new authorities’ plans to urgently restore macroeconomic stability, as well as their reform plans to boost Argentina’s medium-term growth prospects”, they explained from the International Monetary Fund.

During the election campaign, Javier Milei guaranteed that he will not do business with China, Russia and Brazil because of the “communists”. He also described the Brazilian president, Lula da Silvain “corrupt communist”.

“My allies are the United States, Israel and the free world,” he said.

But after his triumph his appointed chancellor Diana Mondinothen traveled to Brazil deliver a personal letter from the president-elect inviting Lula to his investiture, something the left rejected. The person who traveled to Argentina was the former president JairBolsonaro.

Also during the campaign Milei called Pope Francis an “imbecile”, “disastrous” and “representative of evil on Earth”. But once elected, he spoke on the phone with the Church leader and invited him to visit Argentina.

Source: Elcomercio

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