Argentine President Javier Milei recently exploded on congress members for blocking his reforms, pointing to his success in reducing inflation in the resource-rich but financially weak Latin American country. He underscored the reduction has been accomplished through his austere program of cutting 50,000 government employees, slashing 200,000 welfare programs that had “irregular” disbursements, limiting discretionary transfers of government funds to provinces by 98 percent, and revoking public works contracts for being a “giant source of corruption.”
The livewire president said inflation is always a monetary problem, and compared it to being a bad dinner host: “If we’re going to eat dinner and we have pasta for the two of us, but then Esteban and Luis come along. So I put the pasta in the photocopier and print two sheets of pasta. I don’t think they’ll be very happy, because we still have two plates of pasta.”
He added that he still plans to move forward with the dollarization of the Argentine economy, saying that the nation’s monetary base and central bank are already 87.5 percent covered by the American dollar. He just needs to overcome some issues with the central bank that could engender bank runs and promote reckless spending. “If we keep cleaning up the Central Bank’s balance sheet at the current rhythm, the IMF estimates that we could remove currency controls halfway through the year. I’d prefer to wait for the numbers,” he said, confirming that if all goes according to plan the peso will “cease to exist.”
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Prices in Argentina have spiked, as predicted, due to Milei’s “shock therapy” treatment of the nation’s beleaguered economy, devaluing the peso by 54 percent, undoing energy subsidies established by the Peronist government, and removing price controls on goods and services. This caused prices to shoot up to 25.5 percent in December, coming down slightly to 20.6 percent in January.
Costs will continue to climb as the government imposes fuel taxes, slashes more energy and transportation subsidies, and hikes up subway fares.
Milei’s rival, former president Cristina Fernandez de Kirchner, posted a 33-page letter condemning Milei’s administration and warned that his agenda will upend the country’s society “in a sort of planned chaos.”
En el día de San Valentín y, como siempre, enamorada de la Patria comparto con ustedes el documento de trabajo “Argentina en su tercera crisis de deuda. Cuadro de situación”. Va con cita de Juan Bautista Alberdi 😉 https://t.co/qI9aHm6l4D pic.twitter.com/BsH85d25g5
— Cristina Kirchner (@CFKArgentina) February 14, 2024
As Valuetainment previously reported, the labor unions of Argentina held a twelve-hour-long general strike in the capital city of Buenos Aires on January 24th. They attempted to bring the city to a screeching halt in protest of Milei’s economic reforms, including the cutting of more than 300 regulations, multiple energy subsidies, and thousands of government jobs. The unions are also pursuing legal action against the Milei administration and are working with pro-Peronist factions in Congress to block his agenda. Milei has been forced to significantly reduce his omnibus reform bill, and yet it is still being stalled by the nation’s congress.
The astronomical rise in inflation since roughly 2020 was only the second fastest acceleration in the country’s history. Watch the video below to learn more about Argentina’s rocky financial history, or read a text version of the article here.
Shane Devine is a writer covering politics, economics, and culture for Valuetainment. Follow Shane on X (Twitter).
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