“Welcome to the hunger games“, said TV presenter Jorge Rial, but he was not talking about this extreme survival film. The story came back after it became known andI economic shock plan of the far-right Argentine government which includes a devaluation of the pesothe national currency, by 118%, a strong restriction of public spendingthere removal of subsidies and the opening of imports. In a highly polarized country, opinions on President Javier Milei’s maximum austerity program have drawn applause from bankers and businessmen, doubts from specialists and rejection from a diverse and perplexed opposition. According to Juan Grabois, of the Excluded Workers Movement, the Minister of Economy, Luis Caputo, announced “a social murder without flinching, like a psychopath about to massacre their defenseless victims.
Caputo, former director of JP Morgan and Deutsche Bank, and President of the Central Bank of the Government of Mauricio Macri when there was an intense capital flight coming from the credit of 45 billion which had been granted by the International Monetary Fund (IMF), a situation which has earned it severe criticism from the same organization, warned Argentines that for a good part of 2024, inflation will be, in the best case, 20% per month and that the State will no longer control the increase in food or food prices. tariffs for public services or transport. “Let’s take the bikes. Let’s save energy. To share the rent“, proposed María Eugenia Talerico, leader of the traditional right.
The first hours following Caputo’s announcements provoked an earthquake. The price of dollar offered on the black market was 34% higher than the new official value of the currency. Supermarkets, warehouses and grocery stores immediately felt the impact and the mad rush to rebrand labels began. Argentina exports meat, corn and wheat. Each depreciation of its currency has repercussions on the basic basket consumed by the population. This hits people on fixed income, especially retirees and the nearly six million poor people who receive state assistance.
The bitterest drink and those that are missing
Caputo and Milei himself warned that in the first months poverty would increase, which currently reaches almost 45%. The question some analysts are asking is If it reaches 57%, as happened in 2002, after the collapse of the neoliberal economic model, the economy fell by 10%. However, the president and his minister assured that the only alternative to resolve the budget deficit problem is the one that has been implemented. “To be clear, Whoever was middle class, they just threw him into poverty in one click, creating the illusion that there is no other possible way,” Grabois said. “We are going to be careful,” said the Argentine union (CGT), although it rejected these measures.
Manuel Adorni, the presidential spokesperson, also announced that the government would reduce the pension system. Wages, for their part, will not keep pace with inflation, which will close this year at 160% over 12 months. The government of La Libertad Avanza (LLA) is also preparing another battery of measures which includes cancel the abolition of income tax what the previous administration had decreed and which mainly benefited the middle class. In this way, it will try to raise more funds and meet its commitments to drastically reduce the budget deficit. This roadmap was enthusiastically welcomed by the International Monetary Fund (IMF).
Gabriel Rubinstein, who served as deputy minister of the economy in the Peronist government, assured that The adjustment is paid for by “the people and not the political caste”, as Milei had said. “The announcement and what remains to come are consistent with carelessness, disarticulation and improvisation“As everything happened,” said Carlos Melconian, appointed Minister of Economy after the right-wing party won the elections. Patricia Bullrich, appointed Minister of Security by the President.
“The company is the author of an unprecedented political revolution over the last 40 years of democracy, of which Milei is the most iridescent derivative. It seems that a large part of public opinion shares the opinion that the budget deficit is the main culprit of the crisis and that the time has come to make severe cuts in state spending, that the Kirchner have doubled depending on the share of public spending in the state. GDP,” said Joaquín Morales Solá, columnist for the newspaper The nation. “The question to ask is whether this theory will be borne out in practice when the adjustment reaches the pockets of ordinary people.”
Juan Guarino, from the newspaper Financial sphere while questioning the unexplained intentions of the so-called “chainsaw plan» presented Caputo. “With so many factors that will push for excessive inflation, what elements has the government thought of to counteract this wave which will affect middle and lower class households? Basically, the doubt remains: What if we were looking for an inflationary surge helping to liquefy public spending? and the debt issued by the Central Bank? » The word is on the lips of many economists: that inflation pulverizes everything, wages, state budgets, debts.