Javier Milei announced this Sunday in his first speech as head of state that he would make a request hard fit and that it “stagflation” for several months, but promised that this would be the “last bad drink” before the “reconstruction” of the country.
“Unfortunately I have to say it again: There is no money. The conclusion is that there is no alternative to adaptation There is no alternative to “shock”Milei said as he addressed a crowd outside the doors of Argentina’s Palace of Congress after taking office.
There is no alternative to customization
“Shock” plan
The President admitted that the “shock plan” he will implement will have a negative impact on activity levels, employment, real wages and poverty and need rates.
There will be stagflation, but it will not be much different from what happened in the last two years
Milei assured that the “estate“What Kirchnerism leaves behind is the worst that an Argentine government has ever suffered, with a financial and budget deficit of equivalent 17% of GDP, inflation, which is growing at an annual rate of 300%paralyzed economic activity, a poverty rate of Four five% and a poverty rate close to 10%.
He confirmed that he would implement a fiscal adjustment of 5% of GDP, which he promised would be “almost entirely” borne by the state and not the private sector.
It will “clean up” the central bank’s liabilities.
He also confirmed that he would “clean up” the central bank’s liabilities and put an end to the currency issue, which, he stressed, is the cause of high inflation in Argentina.
However, he explained that monetary policy was acting with a lag 18 and 24 monthsfor which he expected inflation to remain high, citing forecasts from private companies that expect monthly rates between 20 and 40% between this month of December and next February.
Delicate fiscal and monetary policy scenario
Milei painted a delicate fiscal and monetary policy scenario that he said puts Argentina on the brink of hyperinflation that could reach 15,000% annually. “This is the legacy they leave us: a planned inflation of 15,000% annuallyWe will fight with all our might to eradicate them,” he promised.
This is the legacy they leave us
“It is our top priority to get everything done efforts possible to avoid such catastrophewhat would bring poverty beyond that 90% and misery above fifty%“he insisted.
“Macroeconomic Adjustment”
Milei also warned of the “inheritance” when it comes to debt: $30 billion in debt to importers; 10,000 million in profits are retained by foreign companies as profit transfer; 25,000 million central bank debt; and 35,000 million national debt.
“The bombshell in things Debts “The debt amounts to 100 billion dollars, which must be added to the almost 420 billion already existing debt,” he warned.
In addition, there are maturities in 2024 National debt issued in pesos equivalent to about 90,000 million dollars, plus maturities with multilateral organizations over 25,000 million.
“With closed financial markets and the agreement with the IMF “The debt has fallen due to the outgoing government’s brutal defaults, so ‘transferring’ the debt is extremely difficult,” he warned.
Despite the vast panorama described, Milei said that after the “macroeconomic adjustment“The situation in Argentina will gradually “improve”. “There will be light at the end of the road,” he promised.