Javier Milei took office as president of Argentina on December 10, warning citizens that painful austerity measures lie ahead as he tries to cut costs and curb triple-digit inflation, all with an empty budget.
The 53-year-old libertarian addressed thousands of supporters from the steps of Congress, who waved flags and chanted “Freedom!” and “Chainsaw!” referring to the power tool he carried with him during the election campaign, which was a symbol of spending cuts. He said:
There is no money.
Then he promised to end the “decades of decline” of his profligate predecessors, who he said had left him the “worst inheritance” of any previous government.
Argentina’s annual inflation rate is 140 per cent and 40 per cent of Argentines live in poverty. Latin America’s third-largest economy is in decline after decades of debt and financial mismanagement.
Milei said the only solution for the economy was “shock therapy” and his election was a turning point in history similar to the “fall of the Berlin Wall”. He noted:
We know that in the short term the situation will worsen. But then we will see the fruits of our efforts.
Milei warned of spending cuts equivalent to five per cent of gross domestic product in a country where millions of people receive social benefits and are used to huge energy and transport subsidies. During his swearing-in, he received a presidential sash and a baton whose handle was carved with the muzzles of his five dogs – cloned from the cages of his favourite, deceased mastiff.
Earlier, the Argentine president briefly spoke with Ukrainian President Volodymyr Zelensky on the steps of Congress. Hungarian Prime Minister Viktor Orbán also attended the inauguration ceremony. Orban wrote on social media, sharing a picture of a meeting with his “good friend,” Brazil’s ex-president Jair Bolsonaro, also in town:
The Right is rising not only in Europe but all around the world.
The first changes will affect the cabinet, with Milei reducing the number of portfolios from 18 to nine and swearing in his new ministers. Milei’s inauguration marked a meteoric rise for the former TV presenter, who entered politics just two years ago. His anti-establishment speeches have caught the attention of voters and prompted comparisons with leaders such as Bolsonaro and former US President Donald Trump.
With his deliberately dishevelled hair and rock star image, he waved a chainsaw at political rallies, promising to “dynamite” the central bank and replace the ailing peso with the US dollar.
But after his election, with few lawmakers from his party left in Congress, Milei softened many of his positions and forged alliances with politicians with whom he had previously had strained relations, including some of them in his cabinet.
Economy Minister Luis Caputo and Security Minister Patricia Bullrich held their respective portfolios under former president Mauricio Macri (2015-2019), with whom Milei has forged an alliance. Talk of central bank closure and dollarisation, meanwhile, has so far ceased.
The questions of whether Milei will devalue the tightly controlled peso and loosen the currency controls that have spawned a plethora of dollar exchanges will soon be decided.
According to economist Victor Becker of Belgrano University, the first “litmus test” for Milei will be whether he stops the Argentine Central Bank, which he has so derided and which finances much of the government’s spending, from printing money.
Milei has warned that it could take 18 to 24 months to bring the country’s inflation under control. The International Monetary Fund (IMF) predicts Argentina’s GDP will shrink by 2.5 per cent in 2023. Javier Lobos, 41, a shopkeeper, said:
Perhaps it will take us many years to rebuild the country but maybe this is the beginning of a new era for us.
