Argentina’s New President Takes Radical Steps to Rescue Economy

A Bid to Tackle Inflation and Economic Crisis

In a move aimed at rescuing Argentina’s troubled economy, President Javier Milei has announced a series of painful measures that will slash the currency’s value in half and reduce aid to provincial governments. The plan is designed to tackle the country’s crippling inflation, which has hit 161% this year.

Measures to Tackle Inflation

• Reducing government subsidies for gas and electricity
• Cutting subsidies for transportation
• Increasing some taxes
• Balancing the budget by the end of 2024

Economists Weigh in on Milei’s Plan

Economists say Milei’s plan is a necessary evil, but it will make people’s lives worse before they get better.

• “A recession next year is unavoidable,” said Martin Castellano, head of Latin American research at the Institute of International Finance. “We think it’s going to be a painful year.”
• Monica de Bolle, senior fellow at the Peterson Institute for International Economics, predicts that the government’s spending cuts will derail economic growth and that the annual inflation rate could roughly double to 300%.

IMF Support and Criticism

The plan has been endorsed by the International Monetary Fund (IMF), which has lent critical support to Milei’s program.

• “These bold initial actions aim to significantly improve public finances in a manner that protects the most vulnerable in society and strengthen the foreign exchange regime,” said IMF spokeswoman Julie Kozack.
• However, some economists have expressed concerns about Milei’s devaluation plan, saying it doesn’t go far enough to close the gap between the official exchange rate and the black market rate. “It’s like pulling the Band-Aid halfway off,” said Lawrence White, an economist at George Mason University.

Opposition Criticism

The opposition has also criticized Milei’s plan, with some calling it a “social murder” that will cause unnecessary pain to ordinary people.

• Juan Grabois, an activist close to former center-left President Cristina Fernández, accused Milei of being a “psychopath” who is willing to massacre defenseless victims.

Economists Say Milei Is Taking the Right Steps

Despite criticism, economists say Milei is taking the right steps to tackle Argentina’s economic crisis.

• “It’s a dysfunctional economy,” said Liliana Rojas-Suarez, an economist at the Center for Global Development. “Something has to be done about it. What Milei is trying to do is shock therapy. You go to the center of the problem and attack.”