Argentina Experiences First Budget Surplus in Over a Decade

The newly elected Argentinian President, Javier Milei, celebrated the country’s first quarterly budget surplus in 16 years, applauding the achievement as an anti-socialist politician.

This quarter marked the first budget surplus since 2008, during the first year of his leftist rival, Cristina Kirchner’s presidency. Mr. Milei, who assumed office in December 2023, described the quarterly budget surplus as a significant achievement.

Previously, Argentina had a budget deficit in 113 of the last 123 years. However, after Mr. Milei took office, the country achieved a monthly surplus for three consecutive months from January to March.

With a poverty rate of 60 percent, an annual inflation rate of nearly 300 percent, and a 20 percent decline in purchasing power, Argentina faced significant economic challenges.

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Upon taking office, Mr. Milei implemented various austerity measures, including cutting thousands of government jobs and reducing energy subsidies.

In his address, he stated, “The challenges we face are tough, but we are halfway there. The effort will be worthwhile this time.”

He mentioned that achieving milestones like a quarterly budget surplus seemed unimaginable months ago.

“Despite opposition from most politicians, unions, journalists, and economic players, we are defying the odds. Inflation is decreasing, falling below expectations every month,” he remarked.

“Our goal is to establish a solid and stable economic structure that enables Argentines to engage, trade freely, and pursue their life goals. We advocate for free prices, clear signals for planning and investment, and providing the necessary groundwork for progress,” he added.

Mr. Milei made it clear that under his administration, public spending will never return to its previous levels. He emphasized that “inflation is a form of theft” and declared zero deficit as a guiding principle, aiming to reduce taxes and increase savings until spending aligns with a growth-oriented country’s standards.

Milei’s Impact

Argentinian markets have responded positively to Mr. Milei’s policies. The peso has strengthened, the country’s risk index is at its lowest level since 2020, and bonds have rebounded from last year’s lows.

However, manufacturing, economic activity, and consumption have declined due to the economist’s perceived extreme policies, leading to potential civil unrest.

In protest of Mr. Milei’s proposed 70 percent cuts in public education funding, hundreds of thousands of teachers, students, and workers in Argentina took to the streets on April 23.

Mr. Milei has garnered support from various quarters in the United States, including former President Donald Trump.

In February, U.S. Treasury Secretary Janet Yellen commended Mr. Milei for taking “significant steps to restore fiscal sustainability, adjust exchange rates, and combat inflation.”

During a visit to the United States in February, the Argentinian president addressed the Conservative Political Action Conference, where he expressed support for President Trump. He criticized socialism enforced by “corrupt businessmen” and “manipulative media outlets” as the cause of Argentina’s decline.

“The corrupt elite comprises politicians who prioritize their privileges over the well-being of the people, businessmen collaborating with corrupt politicians, media outlets angry over the loss of state advertising, unionists protecting self-interest, and professionals dependent on state welfare. We are fighting a significant battle, but we won’t give up on restoring Argentina to its former glory,” he proclaimed.

In April, Mr. Milei met with billionaire Elon Musk at Tesla’s facility in Austin, Texas, where they both emphasized the importance of free markets and promoting freedom. A post by presidential spokesman Manuel Adorni on X’s social media platform on April 12 highlighted their shared views on eliminating bureaucratic barriers to attract investors and fostering technological advancement for universal progress.