Argentina: Milei announces new cuts in public spending, aims for trade deal with U.S.
The president of Argentina, Javier Milei, in his speech yesterday evening to Congress, the bicameral parliament, at the opening of the ordinary sessions, claimed the successes of his government and announced new "fundamental reforms", aimed at streamlining the state, fiscal balance, fighting inflation and relaunching the economy, Agenzia Nova reports.
He said he wanted a trade agreement with the United States at all costs and was aiming for a new agreement with the International Monetary Fund (IMF). Milei also underlined the tightening of security policies. Finally, he reiterated his intention to eliminate "positive discrimination" measures and to make non-resident foreigners pay for "the services they use".
Much of the speech was devoted to the work done against the “black hand of the omnipresent state” and the “caste model,” as well as to criticism of past policies. “We can boast, without a shadow of a doubt, that our economic program is the most successful to date,” Milei said. “In parallel with fiscal discipline, we have applied a tourniquet to the issuance of money and thanks to these two anchors we have reduced inflation in an unprecedented way.”
Above all, the president stressed, “the adjustment of policies is not only not recessive, but expansionary. And it eliminates poverty.” According to the data he provided, the government has “closed more than 200 sectors of the executive with duplicated or obsolete functions and fired more than 40 public employees” and has initiated or implemented “about 1.700 structural reforms, eliminating regulations that limited commercial and economic freedoms and hindered the great productive engine of our country, which is the private sector.” “Thirty markets have been deregulated and are now freer.”
But all this is not enough. The Argentine government is working on a series of “substantive laws,” more than ten, to lay the foundations of a new building, “a sustainable model over time”: projects that “address issues ranging from economic to administrative issues of the State: financial, criminal, civil, issues related to national security, our intelligence system, issues related to trade, private property and a series of structural issues.” For Milei, not only is it necessary to “make a balanced budget mandatory for any state budget, both national and subnational,” but to proceed with “a drastic reduction in public spending,” establishing “a fiscal objective so that by 2027 Argentina’s consolidated public spending will be a maximum of 25 points of gross domestic product.”
In addition, a new agreement with the IMF is needed, for which he will ask Congress for support in the coming days, "to pave the way for a freer and more efficient exchange rate system." "We are pursuing an agreement with the International Monetary Fund to be able to finish cleaning up the Central Bank's balance sheet and finally free ourselves from exchange rate restrictions this year," Milei began. "The current agreement with the IMF aims to restore the Central Bank's assets and therefore its capital, so that inflation is just a bad memory of the past. Therefore, the Treasury will use the money received from the IMF to pay off part of its debt with the Central Bank," he explained.
Furthermore, according to Milei, it is necessary to seize the "historic opportunity" of establishing a trade agreement with the United States and for this we must be willing "to make things more flexible or, if necessary, even to leave Mercosur", the South American Common Market. We also need to "go even deeper, re-establishing the inviolability of private property, for which it is necessary to go into the underground of the laws, of the Civil and Commercial Code and of the Civil and Commercial Procedural Code". Milei also links Argentina's growth on the international scene to a closer relationship with the United States: "We have gone from being the laughing stock of the world, the ally of the countries with the worst performances in the concert of nations, such as Cuba and Venezuela, to being an unexpected protagonist", said the president. "The eyes of the world are on Argentina after a long time. In some cases they even take note of the work we have done and apply it in their countries, as it is doing Elon Musk”, he added, referring to the head of the US Department of Government Efficiency (Doge). “The chainsaw is today the symbol of a change of era and the beginning of a new golden age for humanity,” he said.
Argentina, Milei finally stressed, has also returned to investing in Defense: "We are re-equipping and reclassifying our Armed Forces again, after decades of neglect and contempt for them. Just this week, the first of 24 F16s purchased by our administration arrived, the most important acquisition of weapons in the last forty years". Meanwhile, the internal security situation in Argentina, Milei said, has improved, also thanks to the accusatory system introduced in twelve provinces, half of the country, which in his opinion has made trials faster. "In 2024, we saw the lowest homicide rate in the last 25 years, with a drop of eleven points compared to 2023. In other words, we had the lowest homicide rate in South America", the president said.
Earlier, it was reported that Argentina recorded an annual inflation rate of 117.8 percent in 2024, following a monthly price increase of 2.7 percent in December.
