Milei confirms his ‘chainsaw’ will keep running next year

President Javier Milei has declared that he will continue public spending cuts this year, with Argentina seeing a continuation of his "chainsaw" approach to government outflows.

Milei, 53, has significantly downsized the state since taking office, ending the contracts of more than 30,000 state employees.

"I sat down to think about the government measures for 2025. In this scenario I confirm that I will continue the chainsaw full speed ahead. ¡VIVA LA LIBERTAD CARAJO!" wrote the La Libertad Avanza leader on Tuesday in a post on his X account.

Since taking office in late 2023, Milei has suspended public works projects, reduced and eliminated dozens of state departments, suspended discretionary financing to the provinces, deregulated prices, eliminated subsidies for public utilities and laid off 33,291 employees, said Deregulation & State Transformation Minister Federico Sturzenegger in a social media post on Tuesday.

In the first half of this year Argentina achieved its first fiscal surplus since 2008 and managed to tame runaway inflation which totalled a monthly 25 percent last December. Since then, the pace of price increases has decelerated to the 2.7 percent registered last month. Annual inflation remains at one of the highest in the world, running at 193 percent.

The other side of the coin is a severe recession with gross domestic product falling three consecutive quarters, a contraction which will reach 3.5 percent by the end of the year, according to World Bank projections last month.

Against this backdrop, Milei’s government is negotiating in Congress the approval of the 2025 Budget, which assigns the revenues to administer a state where 52.9 percent was impoverished in the first half of this year, 11.2 percentage points more than the second half of 2023.

But there was still no consensus for approval among the different political parties in the lower house Chamber of Deputies with just four days to go for the conclusion of the period of ordinary sessions of Congress.

If the budget does not pass, the 2023 Budget (already rolled over after the failure to approve the 2024 Budget last year) could be extended, permitting the government the discretionary spending of the revenues in excess of those allocations next year.

Speaking Wednesday, Cabinet Chief Guillermo Francos echoed Milei’s remarks, stating that in its first 10 months in office, the government had been able to “dismantle an elephantine and corrupt state” that served as “an impediment” to good finances.

“With firm convictions and without giving up, we have dismantled an elephantine and corrupt state, which for many years was an impediment machine that suffocated those who work, invest, bet on the country and dream of developing their life project in freedom,” said Francos during an appearance at the Senate. 

Hailing the work of Economy Minister Luis Caputo and his team for putting Argentina’s “macroeconomic situation in order,” the Cabinet chief said that public spending had been reduced overall by seven percent since Milei took office.

– TIMES/NA/AFP