Javier Milei Unleashes “Shock Therapy” Budget to Tame Inflation in Argentina

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Javier Milei, the Argentinian president, has launched a series of austerity programs to help Argentina’s economy get out of its current death spiral. Argentina, once the richest nation in South America, now suffers a Bidenesque inflation rate of 18%. The economy of Argentina has contracted by nearly half since 1980, despite population growth. This is due to triple-digit inflation. There are very few foreign investments. Regulations that are designed to stop business growth or creation seem to hamstring local businesses. The public sector has become bloated and is even less productive than expected. All of this is the legacy left by Juan Peron’s socialism, which empowered the government and discouraged private enterprise.

Milei has begun to fix the problems that have kept Argentina in poverty after he abolished 12 out of 21 government departments on his first official day.

Milei’s Minister of Economy announced Tuesday several economic emergency measures. The goal is for Argentina to have a balanced budget by 2024. This is equivalent to the US cutting its $6.4 trillion budget of $1.4 trillion.

All government employees hired within the past year will be terminated. Caputo stated that this was to stop “a habitual practice of incorporating family and friends before the end of a presidential term.”

All government advertising is suspended for one year. Caputo stated that there was no money to pay for expenditures which are not necessary, and even less to fund media outlets that were created solely to praise the government in power.

The number of senior political positions will drop by more than 50% and the number will decrease by 34%.

Except for a minimum, all transfers of money will cease. In the past, these transfers were used to buy political favors and reward friends. The government jobs that they supported are also going to disappear along with these transfers.

The cancellation of all public works contracts is mandatory unless the project has already begun.

Subventions for energy and transportation will be cut. Transportation subsidies are a job program.

The current welfare programs will continue. However, the emphasis will be placed on paying recipients directly and not through intermediaries. The payments for food and child care will be doubled.

The Argentine Peso has devalued by 54%.

Export and import quotas and licenses will be abolished. In the past, companies had to obtain government approval for foreign trade. Caputo stated, “This removes the discretionary element from the process of approval of imports, ensuring transparency.” Anyone who wants to import is now able to do so.

The tax rate on imports and exports of non-agricultural products will be the same as that on agricultural products.

It’s a good plan, but there are many others. It will all come down to the person with the most will. Argentina’s unions have pledged to oppose Milei’s reforms.

As Mr Milei revealed more details about his “shock treatment” plans, union leaders convened urgent meetings. Axel Kicillof of the populist Peronist leftist movement in Buenos Aires promised: “We will fight boldly… We will have to become much more creative and militant.”

Juan Grabois, the founder of the Union and a campaigner for it, described Economy Minister Luis Caputo to be a “psychopath who is on his way to massacring defenseless victims”. He said: “Does anyone think that people won’t protest?” The people won’t let themselves be led to slaughter.

Milei prepares for the worst when it comes to the leftist unions.

Patricia Bullrich announced on Thursday that protesting individuals and groups will be identified by “video, digital, or manual means”. They will then be charged for the cost to send security forces to their demonstrations.

Bullrich stated that the state would not pay for the security forces. Organizations with legal status or individuals themselves will be responsible for paying the costs.

Parents who bring their children to demonstrations will be sent to prison.

Milei’s economic plan is ambitious and he does not have the majority to pass it in Congress. Milei’s Government is also in imminent financial trouble as it must pay $4 billion to the IMF by the end of the month. Argentina may not be the same after Milei, but it will never be. And now, there is a chance.