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'There's no money': Argentina's Milei doubles down on economic shock therapy

Published 11/22/2023, 08:26 AM
Updated 11/22/2023, 01:16 PM
© Reuters. FILE PHOTO: Argentine president-elect Javier Milei addresses supporters after winning Argentina's runoff presidential election, in Buenos Aires, Argentina November 19, 2023. REUTERS/Agustin Marcarian/File Photo

BUENOS AIRES (Reuters) - Argentina's libertarian President-elect Javier Milei is sticking by his plans for economic "shock" therapy to fix the country's myriad crises from triple-digit inflation to rising poverty and a dearth of foreign currency reserves.

In an interview late on Tuesday, Milei said that his government, which will take office on Dec. 10, would have to make deep spending cuts, something he pledged in the campaign as part of a "chainsaw" plan to trim state spending.

"There's no money. There's no money," Milei told local outlet Neura Media. "If we don't make a fiscal adjustment, we're headed for hyperinflation. We'll have hyperinflation and we are going to have 95% poverty and 70% or 80% homeless."

Argentina, South America's second largest economy, is battling against inflation at 143% and net central bank reserves estimated at negative $10 billion. Over two-fifths of the population is in poverty and a recession in looming.

Milei beat Peronist Economy Minister Sergio Massa in a run-off election on Sunday, a rebuke from voters to the center-left government that many blame for stoking the crisis with high spending, which supports millions but has proved unsustainable.

Self-described anarcho-capitalist Milei, who has sharply divided opinion in Argentina and beyond with plans to dollarize the economy and shut the central bank, said he would limit the size of the state and have a fiscal balance by the end of 2024.

© Reuters. FILE PHOTO: Argentine presidential candidate Javier Milei looks on, as he visits a polling station, during Argentina's runoff presidential election, in Buenos Aires, Argentina November 19, 2023. REUTERS/Agustin Marcarian/File Photo

"I will make a shock adjustment and I will put the economy in a fiscal balance. As I pledged not to raise taxes, this means I will do so by cutting spending," he said. He added that this could mean very tough months ahead for the country.

"A fiscal balance is non-negotiable. The fiscal balance is not under debate. I will sack the minister who spends too much."

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