Milei vows to keep public spending down, says ‘era of present state’ over

The president emphasized that private investments were the only way out for the Argentine economy

President Javier Milei railed against the state once again in a televised speech on Monday, saying that public spending will not pull Argentina out of its current crisis and that the era of the “present state” is over. 

“Private investment and credit, financed by savings, is the way out. It is the only sustainable way to grow,” Milei said in a 15-minute pre-recorded message that aired at 9 p.m. Argentina time. 

Appearing alongside four members of his economic team, among them Economy Minister Luis Caputo and Central Bank President Santiago Bausili, the president’s presentation focused on reviewing the country’s economic performance in the four-plus months since he came into office.

Among his main accomplishments, Milei announced that Argentina’s economy reached an AR$275 billion surplus in March. He added that the financial surplus in the first trimester of 2024 was 0.2% of the country’s GNP.

“This is the first trimester with a financial surplus since 2008,” he said, describing the achievement as an “economic miracle” and a “historic milestone” that could only happen thanks to the “chainsaw” austerity plan his government has implemented. 

He promised to continue along this path, vowing not to raise public spending despite the increasing social and economic crisis affecting the lower and middle classes.

The president went on to say that “the state’s sole duty is to protect Argentines’ lives, freedom, and properties, so that everyone can be the architect of their future,” as well as “creating the environment for society and private activity to flourish.”

He added that politicians and the economic establishment should not be fooled into thinking he will eventually need to increase public spending, because “that is never going to happen under this government.”

According to Milei, the government managed to reduce five Treasury deficit points by targeting what he said was public spending for politicians. “Only 0.4% [of those 5 points] comes from pensioners losing purchase power,” he said, adding that the rest came from “reducing the public spending politicians used to buy people off.” He mentioned cuts in cash transfers to the provincial governments, the freeze of public works and a reduction of the state structure, among other things.

Milei promised that money not spent by the state, “far from increasing public spending,” will be returned to citizens via tax reduction. “We will promote a dynamic of saving and reducing taxes until Argentina’s public spending and fiscal pressure is appropriate for a country that needs to grow.”

This tax reduction, he said, will allow funding investments that will create genuine economic growth “that will strongly multiply as long as Congress supports our reform packages.” Although Milei’s first massive state reform bill, known as the “omnibus bill,” failed to obtain approval in February, a pared-back version is currently being discussed. 

Milei finished his speech by lauding what he called the “heroic effort of most Argentines who are suffering.” “[They] know this is the only way possible if we want a better future for our children,” he said.

The president had hinted at Monday’s announcements on Friday in his speech at the Llao Llao business forum.

The National Statistics Institute (INDEC for its Spanish initials) published a report on April 18 showing that Argentina’s “saldo comercial” (commercial balance) was US$2 million for March based on trade balance estimates. The report attributed the number — marked as “provisional” on the INDEC website — to “the increase in the number of exports and the reduction of imports, although a slight deterioration in terms of exchange, 1.2%, was observed.”

Although progressively decreasing, the three monthly inflation rates published since Milei took office have been the three highest since February 1991 and the highest in the world, with interannual inflation at 276%. Private reports have found that roughly one-third of the money saved by the government was from pension slashing.

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