Argentine President Javier Milei signed a long-delayed agreement with provincial governors on Tuesday, seeking to broaden support for economic reforms and strengthen his nearly seven-month-old minority government, Reuters reports.
The agreement, signed soon with 18 governors, is designed to dispel market doubts about Milei’s ability to tackle the worst economic crisis in decades, which has pushed half the country’s population into poverty and sent inflation soaring to nearly 300 per cent.
Milei, a radical libertarian economist, speaking later in the northern city of Tucuman, where Argentina declared independence from Spain more than two centuries ago, said:
“Argentina is at a breaking point. The people are demanding a change of course.”
Bonds and the peso currency have come under renewed pressure after an initial strong market rally when Milei took office in December, but since then the economy has slipped into recession and political tensions have mounted.
Milei’s La Libertad Avanza party does not have a parliamentary majority or provincial governors, so it has to negotiate with other political parties to implement its programme.
The conditions of the pact proposed by Milei
Among the 10 points of the pact, the Milei government highlighted a balanced budget that is non-negotiable, drastic cuts in public spending, and tax and labour reforms. Martin Llariora, governor of the central province of Cordoba, told reporters on Monday:
“This pact shows that governors from different political parties can join forces so that the national government can fulfil these commitments.”Â
In late June, Argentine lawmakers passed two major legislative reforms backed by Milei aimed at stimulating the economy, cutting public spending and attracting private investment. However, markets have pulled back over the past week.
On Monday, the peso fell about 2 per cent to a record low of 1.450 per dollar in a parallel unofficial market.
The signing of the deal has been delayed since May. It is known as the May Pact, in honour of Argentina’s May Revolution against colonial Spain, and was signed in the historic building where independence was formally declared in 1816.
