Argentina: What are the 10 new economic measures announced by Milei’s government?

The goal is to tackle what the government considers the root problem: a deep fiscal deficit, which Caputo put at 5.5% of GDP, adding that Argentina had a fiscal deficit for 113 of the last 123 years.

"We’re here to solve this problem at the root," he said in a recorded message. "For this, we need to solve our addiction to a fiscal deficit." 

The country's annual inflation rate is approaching 150%, and the poverty rate is at 40% and rising.

In his inaugural speech on Sunday, the radical libertarian Javier Milei stated that monthly inflation will likely range between 20% and 40% until February. He warned that hyperinflation of around 15,000% could occur if government spending is not drastically reduced.

Here are the 10 measures Milei aims to implement to save Argentina’s economy:

1. The value of the peso currency will be halved, with a devaluation to around 800 per dollar from some 365 currently.
2. Public work tenders will be halted, and approved tenders that have not yet started will be cancelled.
3. Energy and transport subsidies will be reduced. "The government has always done this because that's how they trick people into thinking they are putting money in their pockets. However, these subsidies are not free; they are paid for with inflation," said Argentina’s Economy Minister.
4. The State workforce will be reduced, and employment contracts with less than one year of validity will not be renewed.
5. The government's institutional advertising is suspended for one year.
6. The number of ministries and secretariats is reduced. Ministries have been cut from 18 to nine, and secretariats from 106 to 54.
7. Discretionary transfers to the provinces will be cut to a minimum.
8. The import permit system (SIRA) will be replaced by a statistical and informational system that will not require license approval. 'This puts an end to discretion and ensures the transparency of the import approval process. Anyone who wants to import will be able to do so now, period,' said Caputo.
9. The budget of the welfare program ‘Potenciar Trabajo’ will be maintained at 2023 levels.
10. Double the assistance provided to families through the 'Asignación Universal por Hijo' - which grants a monthly subsidy to families for each child under 18 or disabled - and increase the 'Tarjeta Alimentar' - which provides access to a basic food basket - by 50%.

Investors, markets, and the IMF cautiously "welcome" the plan

Investors and markets cautiously greeted Caputo’s announcements. 'The news is positive,' said an Argentina expert from KNG Securities, as reported by Reuters. "It is a massive fiscal effort, with 3 ppts of GDP of spending cuts and 2.2% of additional revenues." The Managing Director of the International Monetary Fund, Kristalina Georgieva, also welcomed “the decisive measures,” stating that they are “an important step towards restoring stability and rebuilding the country's economic potential.”

Although many Argentinians are filled with hope, the deep transformation of the South American country will not be an easy task for Javier Milei. Argentina’s new president does not have a majority in Congress, and the latter will need to approve many of his proposals.