Argentina’s new President, Javier Milei, took office Sunday with a stark warning to citizens to brace themselves for painful austerity measures as he seeks to cut spending and curb triple-digit inflation. The wild-haired outsider won a landslide election in November with sweeping radical pledges to overhaul the economy. His inauguration came amid a deep recession and massive public debt.
“There is no alternative to austerity,” he said, urging people to prepare for the shock treatment of deep cuts in public expenditures. Milei, 53, promised to eliminate the country’s massive deficit and rework its substantial foreign debts – which total more than $45 billion. He has already said he will make good on a promise to shrink the Cabinet from 18 to nine ministries, echoing one of his signature campaign slogans. He also vowed to slash government workers’ salaries and impose curbs on private business activity to slash the country’s enormous tax breaks for the wealthy.
The former banker was sworn in during an elaborate ceremony in which he received a presidential sash and baton engraved with images of his five dogs. He is a libertarian who supports reducing regulation in areas including the environment, gun control, and social policy. He advocates an “anarcho-capitalist” approach to economics that aligns with minarchist and anarchist beliefs.
Economists say the first litmus test for Milei will be whether he can halt money printing by the Central Bank, which has fueled rampant inflation and devalued the currency, which funds most of government spending. Without that, they say, the economy will likely fall into months of stagflation – rising prices coupled with economic stagnation.
Milei, who has promised to purge the political establishment of corruption, is expected to announce a more detailed economic plan this week. He has tapped mainstream economist Luis Caputo to helm the economy ministry and another Caputo ally, Santiago Bausili, to head the Central Bank, suggesting plans for dollarization have been put on hold. He has also walked back some of his more radical social ideas, such as loosening gun controls and reopening the debate over abortion.
Argentina has a strong history of boom-bust economic cycles, and many voters feel the outgoing Peronist government is to blame for years of hardship, with two-fifths of the population living in poverty. Disillusioned with the status quo, voters were receptive to Milei’s outlandish ideas on how to fix the economy and transform the nation. He has portrayed himself as a willing warrior against the creep of global socialism like former US President Donald Trump, whom he openly admires. On his trip to the United States last week, Milei did not visit Mar-a-Lago but took a lunch date with another former US leader, Bill Clinton. He also dispatched a diplomat with a long record of work in climate negotiations to the ongoing Cop28 conference in Dubai, despite his past comments that global warming is a hoax.