“The bottom line is that there is no alternative to austerity and there is no alternative to shock treatment.
“We know that in the short term the situation will worsen. But then we will see the fruits of our efforts.”
Inflation has hit almost 140 per cent year on year and 40 per cent of the population lives in poverty. Analysts have warned government reserves are in arrears, and the heavily indebted country has few credit options.
Milei warned of spending cuts equivalent to five per cent of gross domestic product in Latin America’s third-biggest economy.
Ukraine’s Zelensky heads to Argentina, hoping to win Global South’s support
Ukraine’s Zelensky heads to Argentina, hoping to win Global South’s support
After his speech he made his way – partly on foot, partly in a convertible – from the neo-classical Congress building to the Casa Rosada (Pink House) presidential palace, waving to supporters and flanked by his sister Karina, his closest confidant.
Milei will later swear in a cabinet of nine ministers – a major reduction from the current 18. He has said his first set of measures will be presented to Congress in a matter of days.
Milei’s inauguration caps a meteoric rise for the former television panellist who entered politics only two years ago.
With his deliberately dishevelled mop of hair and rock star persona, he would wave a powered-up chainsaw at political rallies, promising to slash public spending and a bloated cabinet.
He vowed to “dynamite” the central bank and replace the ailing peso with the US dollar.
Argentina’s Milei has a China conundrum of his own making on his hands
Argentina’s Milei has a China conundrum of his own making on his hands
But for Argentines, the future is mired in uncertainty over what exactly their new president plans to do.
With few lawmakers from his party in Congress the hard reality of politics has set in, and Milei has softened many of his stances and allied with politicians he previously insulted, incorporating some into his cabinet.
Talk of shutting the Central Bank, dollarisation and welfare cuts has dissipated.
“Milei 2.0 will still face an uphill climb, but he appears to have adopted a more pragmatic agenda and sought the advice of more experienced political figures,” said Benjamin Gedan, director of the Argentina Project at the Washington-based Wilson Centre.
Among the questions hanging over Argentines’ heads in the coming days will be whether Milei will devaluate the strictly controlled peso and loosen the currency controls which have birthed a multitude of dollar exchanges.
Economist Victor Beker of the University of Belgrano said the first “litmus test” for Milei will be if he actually halts the money printing by the Central Bank that he has so derided, which funds much of the government’s spending.
Milei has warned that it could take between 18 and 24 months to bring the country’s inflation under control, warning of months of “stagflation” – rising prices coupled with economic stagnation.
“Perhaps it will take us many years to rebuild the country but maybe this is the beginning of a new era for us,” said Javier Lobos, 41, a shopkeeper.
“We will be able to work and strive to fulfil our dreams without the burden of suffocating taxes, inflation and the strain of a currency system that is crippling our nation.”