In a surprise turn of events, government candidate Sergio Massa conceded defeat in Argentina's presidential election to ultra-liberal rival Javier Milei. Massa acknowledged Milei's victory, stating, "Javier Milei is president. I congratulate him because the majority of Argentinians voted for him." With nearly 86% of votes accounted for, Milei held a substantial lead with 55.95%, while Massa trailed behind with 44.04%.
The victorious Milei, self-proclaimed "anarcho-capitalist," pledged a drastic shift in policy. He aims to legalize the US dollar, abolish the central bank, and dissolve various ministries while slashing social spending. In contrast, Massa's platform centered around continued intervention in the economy and extensive social programs.
Argentina currently grapples with an economic crisis, marked by skyrocketing inflation (over 140%), widespread poverty (around 40% living below the poverty line), a bloated bureaucracy, low industrial productivity, and a large shadow economy. The peso continues to depreciate against the dollar, and the country's debt remains a mounting concern.
Milei's election victory triggers a change of guard in Argentina, paving the way for his radical policies. He has implemented several measures to tackle inflation, boost fiscal responsibility, and attract investors, such as austerity measures, tax reductions, deregulation, and public sector downsizing.
While these policies show signs of positive impact, they also spark criticism and social unrest. Milei's austerity plan has led to layoffs and reduced public services, sparking protests. However, his efforts to control inflation, gain investor confidence, and grow the economy have initially shown promising results.
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Milei's fiscal policies have led to a significant decrease in inflation, from 25.5% in December 2023 to 2.7% in October 2024. He achieved a balanced budget for the first time in 16 years by extending the previous year's budget and cutting real spending by 25%. He also reduced taxes, such as the 'PAIS Tax,' resulting in a decrease in Argentina's risk index.
Milei's deregulation plans include removing capital controls by 2026 and rebuilding the central bank's balance sheet, essential aspects of his stabilization plan. Furthermore, his public sector downsizing, including freezing public works, reducing pensions, and eliminating over 30,000 public employees, has chaired debates over social unrest and labor union resistance.
Despite the opposition and challenges, Milei's policies have generated positive outcomes, such as inflation control, increased market confidence, and a strengthening peso. Credit is returning to the country, and poverty is decreasing, with real wages recovering monthly. The positive impact on the economy has also attracted local and foreign investors, expected to boost growth further.
