Saturday, June 22, 2024

ARGENTINA | 11-12-2023 13:17

Milei's team to announce austerity measures on Tuesday, says Adorni

Austerity measures "will be communicated on Tuesday by Economy Minister Luis Caputo," says Presidential Spokesman Manuel Adorni in first press conference.

Argentina was waiting on Monday to know the first economic measures of austerity and public spending cuts of ultra-liberal President Javier Milei, which will be presented on Tuesday, according to presidential spokesman Manuel Adorni.

The measures "will be communicated on Tuesday by Economy Minister Luis Caputo," the spokesman said in his first official press conference at the Casa Rosada.

Many market analysts had forecast an immediate devaluation from Milei and his new government, but the government needs time to comply with administrative procedures and finalise policy.

Meanwhile, Milei headed his first Cabinet meeting after slashing the number of government ministries from 18 to 9. The new ministers will be overseen by new Cabinet Chief Nicolás Posse.

Previously the president had anticipated eight portfolios only would remain, but the La Libertad Avanza leader ultimately decided to retain the Health Ministry.

He ordered the elimination of the Women, Gender & Diversity Ministry and the creation of a new ‘Human Capital Ministry,’ which will absorb the functions of other portfolios, such as Labour and Social Development. 

The Central Bank, whose president has not yet taken office, announced that this Monday the official foreign exchange market would operate under the "rule of conformity prior to all demand operations" – that is, with limited transactions only previously authorised, effectively turning the day into a virtual national holiday.

Argentina has a multitude of different exchange rates, accessed via strict currency controls. Milei wants to unroll the complicated system, but is expected to delay the process initially. 

Milei, a 53-year-old libertarian economist, took office on Sunday. He faces a raft of challenges related to Argentina’s troubled economy, which is suffering from more than 140 percent inflation and a poverty rate exceeding 40 percent.

Fiscal reorganisation "will be the government's priority,” said Adorni, who said the country is in a “state of emergency” due to soaring consumer prices. 

Echoing Milei’s words from his inauguration speech, the spokesperson said that “spending more than we have is over.” 

“‘There is no money,’ is not a phrase – fiscal balance will be strictly respected,” said Adorni.

Milei has promised “shock” measures to restore faith in the economy. Enforcing strict austerity, he has vowed to cut as much as five percent of GDP off state spending in the first year.

Questioned about the impact of such measures and the potential for mass unemployment, Adorni attempted to dispel fears among public-sector workers that massive lay-offs are on the way.

"The state employee must be valued. Most of the people who work in the State are valid and necessary. What we are going to fight against is the employment of militants, employment that is there for political reasons and does not contribute anything," he said.

Argentina’s public sector represents more than 18 percent of total employment, one of the highest percentages in Latin America, around 3.4 million people, according to data collated by the AFP news agency.



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