The first 100 days of Javier Milei’s government ended on Tuesday and the British newspaper The Economist carried out an extensive analysis, ensuring that the president “can boast real economic success”. However, he warned of the problems he faces in terms of inflation, poverty and recession.
Regarding the measures that the British media define as “economic successes” of the Argentine government, they underline that “to demonstrate that no more money will be printed, Milei is obsessed with achieving a budget surplus”, together with the objective of achieving a surplus equal to 2% of GDP (Gross Domestic Product). Sense “a big change from last year’s 3% deficit.”
“In both January and February, the government achieved a monthly surplus, the first in more than a decade,” explains the international weekly.
Continuing along these lines, he also considered cutting subsidies for energy and transport, transfers to provinces and capital expenditure, ensuring that “Increasing spending below inflation is a reduction in real terms, known in Argentina as liquefaction” and underlined that “expenditure on contributory pensions, the most important budget item, fell by almost 40% in real terms compared to the first two months of last year.”
Even the Economist mentioned devaluation and rate cuts of interest, which led to inflation initially skyrocketing to a monthly rate of 26% in December, which ““It hurt the Argentines, but it supercharged Milei’s blender.”
Analyzing the results of the economic policy implemented by Milei, the weekly historian underlines that “in addition to the monthly fiscal surpluses and the inflation now trending downwards, the gap between the official exchange rate and that of the black market is only about 20%. Foreign currency reserves grew by more than $7 billion. And the government has successfully extended the maturity of piles of peso debt, reducing pressure on the Treasury.
The IMF is satisfied and the markets are starting to believe it, according to the Economist’s analysis. The country risk index, a measure of a nation’s probability of default, “It has had a reassuring downward trend.”
Regarding the difficulties the country is going through, the article specifies that “affected by inflationit is estimated that the 50% of Argentines live in poverty, compared to 38% last September. In real terms, salaries are lagged by 20 years, consultancy firm Invecq calculates. Furthermore, the economy will contract by 4% this year, Barclays bank estimates.”
In this sense, the Economist supported him “Milei’s first 100 days are marked by serious problems. Beyond the pain, the economic plan is plagued by uncertainties. One of the risks is the exchange rate. In an effort to curb inflation, the government is devaluing the peso by 2% every month. However, with monthly inflation well above 2%, it is probably lower than necessary. Unfortunately, a faster advance or a sharp and sudden devaluation would cause higher inflation.”
Despite the harsh outlook, they recognize it Milei’s approval ratings remain remarkably highs, about 50% and argue that “this is mainly because he managed to blame caste for getting Argentina into this mess.”
Referring to the possibility of applying thedollarisation promised in the electoral campaign, the newspaper started from the fact that “Milei’s plan is to eliminate capital controls and unify exchange rates” and asked “The government will introduce an orthodox monetary program in pesos or will you try todollarize the economy?”
In this regard, he believes that “Milei di’s electoral promise Dollarization has become vague since he took office,” indicating that “the government now talks more about ‘currency competition’ (allowing transactions in dollars or pesos).”
SN
Source: Clarin
