Even before the adoption of this package, President Milei congratulated himself on having achieved “the largest fiscal adjustment not only in the history of Argentina, but also in the history of humanity.”
Argentine lawmakers on Friday definitively approved the program of deregulatory economic reforms of ultraliberal President Javier Milei, after months of debate on a deeply revised text.
“We will give President Milei’s government the necessary tools so that it can reform the state once and for all,” said the leader of the ruling bloc, Gabriel Bornoroni.
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Politically, the green light means “a total success for the government,” political scientist and economist Pablo Tigani told AFP.
But in the economic field, “it will be a return to the policies of the 1990s with deregulation, privatization and the unconditional opening of the economy which will deal a hard blow to industry and small and medium-sized national businesses”, he estimated.
Even before the adoption of this package, President Milei congratulated himself on having achieved “the largest fiscal adjustment not only in the history of Argentina, but also in the history of humanity.”
Drastic austerity program
His government immediately implemented a drastic all-out budgetary austerity programme, with the aim of achieving a “zero budget deficit” by the end of 2024, and thus taming chronic inflation (211% in 2023).
But budget cuts, including the paralysis of public works, coupled with a brutal devaluation (54%) of the peso in December, have strangled purchasing power. An impact that is reflected in consumption, activity and employment.
Inflation in Argentina continued in May the gradual deceleration that began five months ago, to 4.2% over one month, the lowest in two and a half years, but which remains crushing over one year, at 276.4%.
But consumption and activity are plummeting. Recession is setting in, with the economy contracting by 5.3% in the first quarter compared to the same period last year.
Argentina’s gross domestic product (GDP) recorded a sharp contraction of 5.1% year-on-year in the first quarter, while unemployment now hits 7.7% of the population, according to official figures released on Monday .
Opposition and social movements are citing a country in pain, with poverty increasing rapidly since the end of 2023, to 55.5% of the population in the first quarter of 2024, compared to 44.7% a year earlier, according to the Catholic University’s Social Debt Observatory (ODSA-UCA).
