Milei Vows to “Defuse Debt Crisis” with Unveiling of Argentina’s Budget
Argentine President Javier Milei broke tradition by personally revealing the nation’s budget, a task typically assigned to the economy minister.
Javier Milei, a classic liberalist, won the presidential election last November against Sergio Massa, vowing to address economic challenges like high inflation and increased poverty.
During his budget presentation to Congress, Milei pledged to eliminate the inherited “debt bomb.”
In a departure from norms, the 53-year-old economist chose to deliver the budget speech himself, instead of delegating the task to his economy minister, Luis Caputo.
Milei’s opponents mostly boycotted the event, while his supporters cheered him on enthusiastically.
One of his main promises to voters was to eliminate the persistent fiscal deficit caused by mismanagement under the Peronists.
Despite controlling less than 15 percent of the congressional seats, Milei’s Libertarian Party is facing opposition attempts to raise salaries and pensions in line with inflation, a move that he believes would undermine his “zero deficit” budget, supported by the IMF.
The final approval of the budget lies with the Argentine Congress, potentially leading to prolonged negotiations and political gridlock.
Milei emphasized that any spending increase must be offset by cuts in other areas, or it will be rejected.
Protects the Fiscal Balance
The proposed budget aims to maintain fiscal balance regardless of economic conditions, as Milei outlined in his speech.
Economics expert Agustín Almada noted that despite opposition resistance, Milei remains committed to fiscal contraction as a fundamental principle.
Since taking office, Milei has implemented austerity measures, reducing public spending and achieving the country’s first fiscal surplus in 20 years.
By cutting energy and transport subsidies and reallocating finances from the provinces, Milei has managed to decrease inflation significantly.
His administration projects an annual inflation rate of 18 percent by the end of 2025 and a 5 percent economic growth rate.
Plan to Boost Defense Spending
Milei aims to increase investment in defense and intelligence services, though facing obstacles from Congress.
He plans to raise defense spending from 0.5 percent to 2.1 percent of GDP.
The Argentine military, historically significant but underfunded over the years, has demonstrated its weaknesses, exemplified by the tragic loss of the submarine ARA San Juan and its crew in 2017.
The Argentine government faced financial constraints preventing the salvage of the submarine from the South Atlantic Ocean floor.
This content includes contributions from The Associated Press and Reuters.
