Argentine president Javier Milei ends his first year in office with a combined budget surplus of $3 billion and an inflation rate that is down by almost 90%. But plenty of problems remain in the country.
Javier Milei’s first year: $3 billion surplus and tenfold lower inflation in 2024 | Financial World | Sededin Dedovic:
December 14, 2024 - "A year after Argentine President Javier Milei came to power, after deep reforms and a drastic reduction in public spending, Argentina had a tenfold lower inflation rate. The controversial Argentine president introduced free trade in the country, and Argentina has a budget surplus after more than a century. President Milei and the government hope that the new laws, which offer investors decades of tax and customs relief, will quickly attract capital and curb the recession.
"Although challenged by the public, Milei firmly advocated for the reduction of public administration, which won the favor of younger voters and won the election with 55 percent of the vote. He fulfilled his campaign promises quickly after coming to power, resulting in a $3 billion budget surplus a year later.
"The peso was devalued, price controls were lifted, numerous public works were suspended, and local government budgets were cut tenfold. It was 'shock therapy' ... that initially led to many unemployed people and a huge recession. Many Argentines were skeptical about these changes, and many world media outlets wrote that Milei would further set Argentina back. However, the number of poor people is lower than a year ago, and [monthly] inflation fell from 25 percent in December last year to 2.7 percent.
"Although this looks good statistically, ordinary citizens still can't feel any significant improvement. The country is in deep problems that have been accumulating for decades due to poor economic strategy and debt....
"Milei and the government hope that the new laws, which offer investors decades of tax and customs relief, will quickly attract capital and curb the recession. However, large global corporations and investors are still waiting for the new laws to stabilize in Argentina, and the number of foreign investments is only slightly higher than last year. The IMF does not expect the Argentine economy to grow this year, but rather to decline by 3.5%....
"Milei needs economic stability both for foreign investment and to reassure the public in a country that is facing such significant changes for the first time in decades. The initial adjustment has hit the working and middle classes hard because historically the largest part of government spending has been concentrated in these segments. However, some changes for the better for the Argentine population can already be felt, and [one] is the fall in [inflation] compared to December last year....
"Although there was much skepticism at the beginning of his presidency, even among his voters, today Milei has a stable approval rating of 50 percent....
"Most of the reforms implemented in Argentina under Milei — the abolition of price controls, the elimination of subsidies, and the dismantling of import tariffs and export restrictions — are policies the developed liberal world has long abandoned. Milei is trying to create a modern and functional Argentina modeled after Western models of states, after decades of accumulating problems and a complicated system of governance with an overly large state administration."
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