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BUENOS AIRES: Argentina’s new president Javier Milei waves next to his vice president Victoria Villarruel after being sworn in during his inauguration ceremony at the Congress in Buenos Aires on December 10, 2023. – AFP
BUENOS AIRES: Argentina’s new president Javier Milei waves next to his vice president Victoria Villarruel after being sworn in during his inauguration ceremony at the Congress in Buenos Aires on December 10, 2023. – AFP
Milei sworn in as Argentina braces for economic reforms
Vows to ‘dynamite’ central bank and replace ailing peso with US dollar

BUENOS AIRES: Javier Milei was sworn in Sunday as Argentina’s president, as the country steels itself for harsh spending cuts and economic reforms aimed at curbing rampant inflation. The 53-year-old libertarian economist has vowed there will be no “half-measures” as he tackles decades of overspending, debt and convoluted currency controls in Latin America’s third-biggest economy.

“I swear to God and country... to carry out with loyalty and patriotism the position of president of the Argentine nation,” he said as he took the oath of office. Thousands of supporters lined the streets outside Congress, waving the country’s blue-and-white flag and chanting Milei’s rallying cry of “freedom!”

“Perhaps it will take us many years to rebuild the country but maybe this is the beginning of a new era for us,” said Javier Lobos, 41, a shopkeeper. “We will be able to work and strive to fulfill our dreams without the burden of suffocating taxes, inflation and the strain of a currency system that is crippling our nation.”

The event brings together a diverse handful of world leaders, including Ukraine’s President Volodymyr Zelensky and Hungary’s nationalist Prime Minister Viktor Orban — the only EU leader who has maintained close ties to Russia. “The Right is rising not only in Europe but all around the world,” Orban wrote on social media, sharing a picture of a meeting with his “good friend,” Brazil’s far-right ex-president Jair Bolsonaro, who is also in town for the ceremony.

Chile’s leftist leader Gabriel Boric and the King of Spain Felipe VI are also attending. After taking the oath of office, Milei will give his first speech as president from the steps of Congress. He will later swear in a cabinet of nine ministers — a major slimdown from the current 18. He has said his first set of measures will be presented to Congress in a matter of days.

The chainsaw

Milei’s inauguration caps a meteoric rise for the former television panelist who entered politics only two years ago. His rants against the “thieving” establishment fired up voters and drew comparisons to leaders like Bolsonaro and former US president Donald Trump.

With his deliberately disheveled mop of hair and rock star persona, he would wave a powered-up chainsaw at political rallies, vowing to slash public spending and a bloated cabinet. He vowed to “dynamite” the central bank and replace the ailing peso with the US dollar.

‘Lights all flashing red’

Inflation has hit almost 140 percent year-on-year and 40 percent of the population lives in poverty. “Like many of his predecessors, Milei will take office with the warning lights all flashing red,” said Benjamin Gedan, director of the Argentina Project at the Washington-based Wilson Center.

But for Argentines, the future is mired in uncertainty over what exactly their new president plans to do. With few lawmakers from his party in Congress the hard reality of politics has set in, and Milei has softened many of his stances and allied with politicians he previously insulted, incorporating some into his cabinet.

Talk of shutting the Central Bank, dollarization and welfare cuts has dissipated. “Milei 2.0 will still face an uphill climb, but he appears to have adopted a more pragmatic agenda and sought the advice of more experienced political figures,” said Gedan.

However, with central bank reserves in the red and no credit line Milei is facing “bare cupboards,” added the analyst. “His rescue strategy, including a rapid downsizing of the government, will be tough to swallow for a long-suffering population. Either way, the next few months will almost certainly see social and political turmoil.”

‘Stagflation’

Among the questions hanging over Argentines’ heads in the coming days will be whether Milei will devaluate the strictly controlled peso and loosen the currency controls which have birthed a multitude of dollar exchanges. Economist Victor Beker of the University of Belgrano said the first “litmus test” for Milei will be if he actually halts the money printing by the Central Bank that he has so derided, which funds much of the government’s spending.

Milei has warned that it could take between 18 and 24 months to bring the country’s inflation under control, warning of months of “stagflation” — rising prices coupled with economic stagnation. For 2023, the International Monetary Fund (IMF) has projected a contraction of 2.5 percent in Argentine GDP. — AFP

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