Javier Milei, who won the presidency of Argentina last month, has unveiled deep spending cuts and a sharp devaluation of the country’s currency. The government plans to halt new infrastructure projects, lay off recently hired government workers, reduce energy and transportation subsidies, cut payments to the provinces, and cut the number of federal ministries in half. Additionally, the Argentine peso will be officially devalued, resulting in even higher inflation. Milei and many economists argue that these reforms are necessary to address years of government overspending, but critics warn that they will lead to increased hardship in a nation already facing economic crises. Milei, a self-proclaimed “anarcho-capitalist,” campaigned on promises to eliminate Argentina’s central bank and replace the peso with the US dollar. However, he has acknowledged that stabilizing the economy must come first through deep cuts. The government’s new economy minister, Luis Caputo, stated that the drastic measures were necessary due to the “worst situation in history” inherited by Milei. Argentina has long struggled with economic dysfunction caused by severe mismanagement, with the latest crisis stemming from the policies of former president Cristina Fernández de Kirchner. The International Monetary Fund has expressed support for Milei’s moves, while critics argue that they are likely to induce a recession and face major political challenges. The government has announced some measures to soften the blow for the poorest families, including doubling support payments and increasing food subsidies. Many details, such as the number of job cuts and the extent of energy and transportation cost increases, remain unclear.
