President Javier Milei marked his first year in office Tuesday, boasting an improved fiscal balance and reduced inflation, albeit at the cost of a “shock” round of austerity that has deeply impacted the pockets of Argentines.
The President took office on 10 December last year, declaring there was “no alternative to shock” for a state burdened by pathological debt and rampant inflation.
He now takes pride in having foreseen the harshness of his reforms: “That’s what gave us the credibility to carry out the work we’ve been implementing all year,” he said in a speech to business leaders last week.
In just one month of governing, Milei achieved Argentina’s first fiscal surplus in a decade. He also managed to lower inflation from 25.5 percent last December — a month in which he devalued the peso by 52 percent — to 2.7 percent in October, the latest available data.
As a result, the country’s risk rating, tracked by JP Morgan, fell from 3,000 points to below 740, a historic low.
On the back of a confrontational narrative, in which he pledged to “end the caste” of politicians and fight against “the impoverishing left,” Milei has also eliminated more than 30,000 public sector jobs, reduced ministries and state agencies, frozen public works projects, and intensified crackdowns on protests.
Despite two general strikes and some tense demonstrations — most notably in defence of public universities — Milei boasts stable support that baffles his critics: around 45 percent approval, and even close to 50 percent, according to some recent polls.
“We are the government that in its first year has achieved the highest level of approval and trust after carrying out the largest fiscal adjustment in the history of humanity,” he said at the CPAC Argentina conservative forum in Buenos Aires last week.
Social impact
While there has been “fundamental success” in terms of economic stabilisation, “the socio-economic cost has been significant. The question is whether these costs are temporary or long-lasting,” says Gabriel Vommaro, a sociologist from the Universidad Nacional de San Martín.
Poverty surged by 11 percentage points in Milei’s first six months in office, a historic increase, reaching 52.9 percent of the population, according to the latest data from the INDEC national statistics bureau.
Those hardest-hit by the austerity measures are over seven million retirees and pensioners, whose incomes were partly frozen and saw reductions in medicine subsidies. Milei also vetoed a law that sought to grant them an eight-percent increase.
The President similarly vetoed a law increasing the university education budget, freezing student scholarships and funding for scientific research.
This came during a year of nearly 200 percent inflation, during which he governed under the 2023 budget, a framework he seems set to replicate for next year, demonstrating little interest in having Congress approve his spending plan for 2025.
“The government applied a very strict orthodox adjustment to stabilise some macroeconomic variables, but at a high social cost,” noted the Centro de Economía Política (CEPA) in a December report.
The adjustment included devaluing the currency, deregulating the economy, and eliminating subsidies without offsetting the price impact with increased incomes.
This year alone, over 260,000 jobs were lost, and consumption plummeted by more than 20 percent, although signs of recovery are now emerging, according to the report.
Amid these economic and social changes, Milei also launched a “cultural battle” against politicians and journalists, whom he accuses of corruption; social justice, which he deems “an aberration”; and the state, which he claims to want to “destroy from within.”
Some 65.7 percent of Argentines believe that “hatred and intolerance are on the rise” under Milei’s government, according to a September survey by the consultancy Zubán Córdoba.
Journalists’ organisation FOPEA published a report on Tuesday stating that journalism suffered 173 attacks during Milei’s first year in office. Most of these came from state sources, with “harassment and digital violence remaining the main forms of aggression against the press.”
by Leila Macor, AFP
Comments