When Javier Milei was campaigning last year to become the president of Argentina, he brandished a chainsaw to symbolize his determination to substantially cut public spending.
Now, six months into his right-wing presidency, how is his shock therapy for both the country’s government and economy working?
“The changes our country needs are drastic,” Mr. Milei said shortly after being elected. “There is no room for gradualism.”
And he certainly took swift action. In his initial package of measures, he devalued Argentina’s currency, the peso, by 50%, slashed state subsidies for fuel, and cut the number of government ministries by half.
The quick reduction in public spending has helped Argentina swing from a fiscal deficit – the difference between the government’s spending and income – of 2 trillion pesos (approximately $120 billion) in December of last year to a surplus of 264.9 billion pesos in April.
Argentina also reported a surplus in January, February, and March, marking the first time it had achieved this monthly target since 2012.
However, Mr. Milei, who describes himself as a libertarian, has made cutting inflation his main priority, telling the BBC last year that it was “the most regressive tax that most afflicts people.”
Inflation has slowed – in April, the month-on-month rate fell to 8.8%, the first time since October that it was not in double figures. This inflation measure is closely followed in countries like Argentina that have long had high inflation.
Yet, when it comes to the more globally recognized annual inflation rate, this hit 289.4% in April. To put that into perspective, in the UK the annual rate is currently just 2.3%.
Although official growth figures are not yet available for the period since Mr. Milei took office on 10 December, there is evidence that Argentina’s economy has contracted sharply, with consumer spending dropping off in the first three months of this year.
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