Argentina’s Javier Milei Unveils His ‘Austerity Budget’ to Crush Inflation and Crony Capitalism – RedState

Argentina’s Javier Milei Unveils His ‘Austerity Budget’ to Crush Inflation and Crony Capitalism – RedState

Argentinian President Javier Milei has rolled out a program of austerity measures designed to bring Argentina’s economy out of the death spiral that it is in. Once the wealthiest nation in South America, Argentina suffers from a Bidenesque annual inflation rate of 180%. Despite population increases, its economy has shrunk by almost half the years since 1980. Credit for businesses and consumers is nearly impossible to come by…thanks to the triple-digit inflation. Needless to say, there is virtually no foreign investment. Local businesses are hamstrung by regulations that seem designed to prevent business creation or growth. The public sector is bloated and even more unproductive than one would expect. This is all the legacy of Juan Peron’s populist socialism that empowered government and discouraged the private sector.

            

 

After abolishing 12 of 21 government ministries on his first day in office (Javier Milei Takes Office in Argentina, and His First Move Immediately Triggers All the Right People), Milei is starting to work on the rot that has kept Argentina poor.

On Tuesday, Milei’s Economy Minister announced a series of emergency economic measures. The goal is to balance Argentina’s budget in 2024. The cut is the equivalent of the US reducing its $6.4 trillion budget by $1.4 trillion.

  • All government employees hired in the last year will be fired. Caputo said this is to end “a habitual political practice of incorporating friends and family before the end of a presidential term.”
  • All government advertising will be suspended for a year. “There is no money for expenses which are not strictly necessary and far less to sustain with tax-payer funding media which were only created to sing the praises of the incumbent government,” Caputo said.
  • Reducing government ministries to nine and secretariats from 106 to 54 will cut senior political posts by over 50%, and the number of political posts will be cut by 34%.
  • Transfers of money to provinces will stop except for the bare minimum. These transfers have previously been used to reward friends and buy political favors. Not mentioned is that the government jobs they supported will also go away along with the transfers.
  • All public works contracts are canceled unless the project is already underway.
  • Energy and transportation subsidies will be reduced. The transportation subsidies are essentially a jobs program.
  • Current welfare programs will continue, but an emphasis will be on paying recipients directly rather than through a web of intermediaries. Payments for child care and food will be doubled.
  • The Argentine peso is devalued by 54%.

       

 

  • Quotas and licenses for exports and imports are abolished. In the past, businesses had to get government permission for foreign trade. Caputo said, “This takes the discretionary element out of the process of approving imports, guaranteeing transparency. Whoever wants to import can now do so, full stop.”
  • Taxes on non-agricultural exports and imports will be raised to the same level as those on agricultural products.

This is a great plan, but the world is cluttered with great plans. Whether this succeeds will come down to who has the strongest will. Argentina’s labor unions have vowed to fight Milei’s reforms.

Union leaders called urgent meetings as Mr Milei announced more details of his “shock therapy” plans, while Axel Kicillof, the governor of Buenos Aires province from the left-leaning populist Peronist movement, promised: “We are going to fight boldly … we will have to be much more creative and much more militant.”

Union founder and campaigner Juan Grabois described economy minister Luis Caputo as a “psychopath on the verge of massacring his defenceless victims”. He said on X: “Do they seriously think people aren’t going to protest? … People won’t allow themselves to be led to slaughter.”

Milei is preparing for the worst from the leftist unions.

Protesting individuals and organizations will be identified with “video, digital or manual means” – and then billed for the cost of sending security forces to police their demonstrations, said Milei’s security minister, Patricia Bullrich, as she announced the new protocol on Thursday.

“The state is not going to pay for the use of the security forces; organizations that have legal status will have to pay or individuals will have to bear the cost,” Bullrich said.

If children show up at demonstrations, their parents are going to jail.

Not only is the economic plan ambitious, Milei does not have a majority in Congress to push it through. Milei’s government is also facing imminent insolvency as it owes a $4 billion payment to the IMF and sovereign debt holders at the end of January. He may not succeed (Argentina’s New President Is Probably Doomed to Fail but the Path Will Be Glorious), but Argentina will never be the same, and now, at least, it has a chance.

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Originally Posted on: https://redstate.com/streiff/2023/12/17/argentinas-javier-milei-unveils-his-austerity-budget-n2167643
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