– Today the reconstruction of Argentina begins – announced Javier Milei, the president-elect elected by the citizens of this country with nearly 56 percent of the votes, late on Sunday evening. – The end of the ubiquitous state model has comethat impoverishes Argentines – he spoke.
Javier Milei has already announced that he wants to completely abolish the welfare state. He is a supporter of extreme economic liberalism in state policy. He announced that he would quickly make “historic changes” in a country that is “experiencing the most severe crisis in its history.”
He also warned his compatriots that “the changes Argentina needs will come drastic because there is no time to grade themnor mitigation.
I want you to understand that Argentina is in a critical situation. The changes our country needs are drastic. There is no room for gradualism, emphasized Javier Milei.
As the Financial Times reminds us, according to grandiose announcements, Argentina is to experience widespread privatization, abolition of taxes, and public spending reduced to an absolute minimum, including cuts in state spending on health care.
The number of ministries is also to be reduced by half. He announced, among other things, the removal of the functions of the minister of education, health and public works. He wants to replace these positions with private investments.
During the election campaign, he talked about throwing the country a “chainsaw”. He illustrated all these cuts with performances by appearing with a chainsaw in his hands.
Dollarization of the Argentine economy
Javier Milei also announced the “burning” of the central bank, calling for its complete liquidation. He showed up at campaign rallies with a large $100 bill with his own face on it instead of Benjamin Franklin’s.
The dollarization of the Argentine economy may become a symbol of change. It means country will abandon the Argentine peso and use the US dollar as its currency.
Most economists in Argentina say Milei’s flagship plan to replace the peso with the US dollar is unfeasible in the short term, writes “FT”.-
Argentina has almost no dollars in its central bank and has no access to international credit. The official exchange rate is just over 350 pesos per dollar, but the black market rate is as high as 900 pesos, the economic daily calculates. The gap, which has widened dramatically as the parallel exchange rate has fallen in recent months, has resulted in widespread price distortions.
According to CNN Buissens, Argentina has one of the highest inflation rates in the world, reaching 142%. Milea’s proposal to change Argentina’s currency to the dollar is based on the argument that the dollar is stronger than the peso and, unlike the peso, cannot be printed at will. CNN reminds that Ecuador and El Salvador also dollarized their economies to fight inflation.
Milei’s “extremely libertarian” proposals arouse fear on the one hand and enthusiasm on the other. Voters are genuinely intrigued by his promise to dollarize the economy. “They are ready giving up the peso like a bad habit, regardless of whether Milei will be able to successfully adopt the US currency or not” – said Benjamin Gedan, director of the Argentina program at the Wilson Center think tank, quoted by the BBC.
Mileia did not spare harsh words towards the largest trading partners – China and Brazil. He emphasized that he was ready to break off cooperation because these were communist countries and such countries should not be cooperated with. He also announced closer relations with the US. As the BBC points out, Mileia reflects anti-establishment sentiment in the region after a decade of slow growth and economic collapse caused by the pandemic.
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