Tax cuts, wave of privatizations, dollar as official currency and closure of the Central Bank. The economic measures promised by the new Argentine president are radical. Ultra-liberal and drastic reforms to try to save the South American country from yet another crash and galloping inflation
On the market stalls of Buenos Aires, and throughout Argentina, price cartels last a few days. Inflation in these parts is so high that we have to adjust them every week: in one year the cost of living has grown by over 140 percent. In the space of twelve months the cost of meat has more than doubled, in the last month the price of a kilo of bread has risen from 800 to 1100 pesos.
Call me an anarcho-capitalist
We need to start from here to understand Javier Milei’s victory in the presidential elections. An anarcho-capitalist, he defines himself, and rejects the label of right-wing ultraliberal. He promised shock measures: sharp tax cuts, privatization of schools and healthcare (but he denied this on the eve of the vote), fewer capital controls and the “dollarization” of the country.
In practice, Argentines would be asked to officially use US currency instead of the peso, which is already largely happening with astronomical exchange rates on the black market. The transition to the stars and stripes currency should protect purchasing power, but would cause the value of the South American currency to fall even further, making it extremely difficult to find financiers on the markets.
Seals at the Central Bank
Milei then wants to shut down the Central Bank, which has brought rates to 133 percent to curb prices, because he believes it is responsible for hyperinflation. The risk is that of plunging Argentina into the crisis, which must repay a debt of 44 billion dollars to the International Monetary Fund for aid received in the past, in the tenth crash of its history.
A country on the precipice
State reserves are in the red, the recession is advancing, four out of ten Argentines live in poverty. And those who have the money spend it, filling pantries and bars. Because no one can know how much that money will be worth in your pocket tomorrow.