Newly inaugurated Argentine President Javier Milei took office Tuesday, promising shock free-market reforms while warning of economic pain for Argentines in the near term.
The right-wing leader outlined plans to slash government spending by up to 20%, privatize state assets and lift barriers to trade. He said his policies would curb rampant inflation and boost growth.
Painful Adjustment Period Forecast
In his inaugural address, Milei cautioned Argentines to brace for tougher times before his economic prescriptions take effect.
“The next two years will be very hard for Argentines,” Milei said. “I ask for your understanding, support and sacrifices, because it’s the only possible path for us.”
He compared the situation to a painful medical procedure, saying his austerity plan would be like “surgery without anesthesia” for the Latin American nation struggling with inflation approaching 100%.
| Key Data on the Argentine Economy | |
|---|---|
| 2022 Inflation Rate | 95% |
| GDP Growth (2022) | 4% |
| Poverty Rate | 40% |
While appealing for patience from citizens, Milei asserted that free markets and less state intervention would unleash Argentina’s economic potential.
“We must trust in the power of freedom,” he declared.
Vows to Slash Bureaucracy, Privatize Industries
Upon taking office, Milei moved swiftly to downsize the federal government, cutting the number of ministries from 18 to nine.
He appointed libertarian economists to lead finance and other key cabinet positions. Top aides signaled plans to privatize money-losing state companies, ease currency controls and reduce trade barriers.
“There is no time to lose in transforming Argentina’s dysfunctional statist economy,” said Economy Minister Javier Madanes Quintanilla.
Critics warned that stripping away social supports could worsen inequality and trigger political unrest in the recession-hit nation. Supporters counter that free-market reforms offers the only real solution after decades of economic mismanagement.
“Milei is willing to administer the strong medicine Argentina needs to recover, despite the painful side effects,” said Mary Anastasia O’Grady, Latin America columnist for the Wall Street Journal.
How Milei rose to Power
The outspoken Milei, an economist by training, surged to victory in October 2022 elections by tapping public frustration with the political establishment over Argentina’s seemingly endless economic tailspin.
Newly Sworn-in President Javier Milei arrives for his inauguration ceremony in Buenos Aires. Photo: Bloomberg
During the campaign, Milei drew comparisons to Donald Trump for his confrontational rhetoric and anti-immigration stance. His rise has alarmed human rights activists concerned about the president’s defense of Argentina’s former military dictatorship.
What Comes Next?
- Inflation Battle – Milei has pledged to sharply cut money printing while removing obstacles for Argentines to use dollars and cryptocurrencies instead of the unstable local peso. But taming inflation could require deep budget reductions that spur more economic pain and pushback.
- Clash Over Central Bank – The new president wants to limit the central bank’s autonomy. Such a move could unsettle financial markets and imperil any potential IMF aid package.
- Reforms to Test Alliances – Milei will need support from moderate allies in the legislature and courts to drive his transformative economic vision into law. Their cooperation is uncertain as reforms start to bite.
In the long run, the success or failure of Milei’s presidency may hinge on his ability to curb entrenched inflation without derailing the economy and fracturing Argentina’s fragile political consensus in support of democracy.
International Reaction Mixed
World leaders offered a range of reactions to Milei’s inauguration reflecting a mixture of hope and unease over his economic plans and populist brand of politics:
- Ukrainian President Volodymyr Zelenskyy – “I congratulate President Javier Milei and the people of Argentina as they work to build a prosperous nation.”
- Brazilian President Jair Bolsonaro – “We welcome a great new partner in the region with a vision of freedom.”
- UK Prime Minister Rishi Sunak expressed “strong concern over extremely troubling reports from human rights organizations about Milei’s past statements defending Argentina’s military junta.”
- Chinese President Xi Jinping urged “constructive bilateral talks on trade and investment with Argentina’s new leadership.”
- The Biden administration pledged to “monitor closely the policies of Milei while working as partners where our values and priorities align.”
With Latin America increasingly split between leftist and conservative governments, all eyes will be on maverick Milei as he sets out to test his libertarian vision.
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