It has been about six months since Argentina’s right-wing populist and economically liberal President Javier Milley took office.
His radical economic plans garnered voter support during the election campaign in a country long mired in economic turmoil, and the self-described “anarcho-capitalist” is expected to meet German government representatives in Berlin this weekend to tout the success of his policies. European Diplomatic TourBut experts say results have been mixed.
“The right direction”
Argentina Germany has long struggled with a politically bloated state sector and structural budget deficits, the latter causing periodic debt-repayment crises and inflation spikes, says Hans-Dieter Holzmann of the Friedrich Naumann Foundation in Buenos Aires, who has links to German neoliberalism. LDP (FDP).
According to Holtzmann, Argentina’s tradition of protectionism has also seriously damaged the country. “Many aspects of Millay’s economic policies point in the right direction towards a more positive economic development for Argentina, such as the emphasis on reducing government spending and bureaucracy and expanding enterprise and free trade,” Holtzmann told DW.
Falling inflation, budget surplus
Holtzmann also believes Millay had some success in the battle. High InflationThis is down from about 25% per month in December last year to 4.2% per month in May this year.
Millay’s Significant austerity measures It’s also led to a budget surplus. But such success needs to be sustainable, Holtzman added.
“There is still much to be done to improve supply conditions and deliver further growth, domestic and foreign investment and jobs in the country,” he said.
Milley currently enjoys solid support among the people, with surveys showing that more than half of Argentines support his policies.
Austerity impacts ordinary people
Economist Hernan Letcher, director of the Argentine Economic Policy Center, is more critical, saying he believes the victims of Millay’s deregulation and austerity policies are ordinary people, not what Millay calls “the caste.”
It was a term Millay used during the election campaign to describe the network of ruling politicians and their allies, “but pensioners, public sector workers, construction workers are now also affected,” Letcher said.
Shortly after taking office, President Milley devalued the national currency, the peso, by more than 50 percent against the U.S. dollar, making exports cheaper and more competitive but imports more expensive than ever before.
Researchers from the Catholic University of Buenos Aires also believe that the devaluation of the peso is one of the main reasons for the further rise in poverty, which rose from 45% to 57% under Milley’s presidency, reaching its highest level in the past 20 years. This means that around 27 million Argentines now live below the poverty line.
In addition, economic output fell by 5.3%, with industrial production and economic activity indicators also showing weak figures.
New Reform Package
A breakthrough is expected to come from a reform package aimed at boosting both foreign and domestic investment. Passed the SenateA few days ago, the Argentine Senate passed the bill with the support of the opposition.
After months of negotiations, Milley’s camp backed off its extreme demands, and the president now has significantly more room to maneuver.
“The fact that this reform law was finally passed, despite probably unnecessary delays, is one of the successes of the first six months,” Carl Moses, a Buenos Aires-based economic consultant, told DW.
The government has now learned how to deal with an opposition party that is willing to cooperate, he added.
“A deep recession that was used to balance the budget and control inflation has of course had a negative impact, but we would have had a recession regardless,” Moses said. “Now it appears the worst is over.”
This article was originally written in German.