Javier Milei: these are the challenges of 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 adjustment 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 Fernandez and becomes the first economist in the history of the country to occupy the Presidency, which he reached only two years after founding his party. Freedom Advances.

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He libertarian He now has four years to fulfill his promises with which he seeks to make Argentina “big again.”

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

The goal of Milei with its first measures it aims to achieve the goal of zero deficit in one year.

These are the challenges of the new president of Argentina:

Inflation and poverty

Milei receives a country with an 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 “lowering 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.

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

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

35.9% of Argentine households

received some social assistance in 2023 through social income transfer programs and direct food assistance, including the delivery of food in schools or cafeterias, according to a report from the Argentine Social Debt Observatory of the Argentine Catholic University .

Privatization of public companies

The day after his victory in the November 19 runoff, Milei confirmed that he will privatize the state companies YPF, Public TV, National Radio, Télam, among other. “Everything that can be in the hands of the private sector, is going to 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 operating deficitaccording to the consulting firm Inveq, cited by the portal The Economist. These companies closed the fiscal year 2022 with an operating deficit of 4,848 million dollars0.75% of GDP.

Dollarization and Central Bank

The dollarization of the economy was the strongest proposal of Milei, but after being elected he clarified that he will not promote it immediately. The reason? Argentina It needs to have between 30,000 and 35,000 million in its coffers to take that step.

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

Sergio Morresi, doctor 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 act otherwise.”

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

The congress

In it CongressFreedom Advances, Milei’s party has only 38 of 257 deputies and seven of 36 senators. That is, the majority is not enough to carry out many of the president’s promises, such as the privatization of public companies.

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

Already before the second round Milei He approached parties like Together for Change, which brought Mauricio Macri to power (2015-2019). Your future Minister of Economy, Luis Caputowas in the cabinet of Macrilike Patricia Bullrichappointed Minister of Security, her former rival in the first electoral round and a key ally for victory in the runoff.

“That he would need alliances due to lack of legislative flow and absence of technical and political staff 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 within Together for Change There were those who were uncomfortable with the alliance with Milei, such as the historic Radical Civic Union party (UCR).

Debt with the IMF

In 2018, during the government of MacriArgentina received a loan from International Monetary Fund (IMF) of 44,000 million dollars, considered the largest economic rescue in the history of the country.

Alberto Fernandez received the debt with the IMF in default and agreed, after months of negotiations, to make payment conditions more flexible; Despite this, Argentina did not meet the deadlines in a timely manner and Milei You will have to renegotiate them.

At the moment Argentina It has debt maturities with the IMF for 10.6 billion dollars to be paid until April 2024.

The day after the victory of Mileithe managing director of the IMF, Kristalina Georgievagreeted the president-elect on Twitter, and reported that they contacted his team to begin negotiating.

A week later, Milei traveled to the United States with his Minister of Economy, Luis Caputo, and his chief of staff Nicolas Posse. The two officials met in Washington with the managing director of the IMF, Gita Gopinathto “better understand the plans of the incoming authorities, 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.

International relations

During the election campaign, Javier Milei assured that he will not do business with China, Russia and Brazil because of “communists”. He also described the Brazilian president, Lula da Silvaof “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 to deliver a personal letter from the president-elect inviting Lula to his investiture, something that the leftist rejected. The one who did travel to Argentina was the former president Jair Bolsonaro.

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