2023-12-12 04:05:00
“Atrocities are committed early in the legislature,” as the saying goes, referring to unpopular measures such as budget cuts made by a new government. This is based on the assumption that voters will grant a new government a grace period to allow it to carry out the painful structural changes necessary. The new president of Argentina, Javier Milei, has the clear intention of adhering to this principle.
The ultraliberal economist and his very small cabinet have been in office since Sunday. The suppression of some ministries, which went from 18 to 9, is the first sign of the announced reduction of the state apparatus. The new Government still has a much more difficult task ahead of it, as it has announced its intention to reduce public spending. And that usually means job cuts. “The president says there is no money and the people applaud: that is the novelty,” says the newspaper Clarín, which has detected a change of mood in the country during the inauguration speech. Apparently there is support for the reformist course.
Drastic monetary measures announced for Tuesday
However, it appears that the expected monetary policy measures will not be announced until Tuesday. Then the Minister of Economy, Luis Caputo, will speak, according to government sources. Caputo relies on well-known faces from the time of former president Mauricio Macri, whom the new opposition group accuses of being partly responsible for the serious economic crisis due to a million-dollar loan from the International Monetary Fund (IMF).
The person responsible for finances in Caputo’s team will be Pablo Quirno, who spoke with great pathos: “Starting tomorrow we will have to face what is probably the biggest challenge of our generation. We are going to leave everything on the field for our beloved country, for our children and grandchildren, with the support of everyone, looking forward. Let’s go Argentina!” Starting Tuesday, however, the markets will expect less pathos and more concrete news. Among others, from Leonardo Madcur, who will act as Argentina’s representative in the (IMF). He was an official of the Peronist Economy Minister Sergio Massa. It is also about of a pragmatic decision by Milei.
Brussels and Brasilia await signals on the EU-Mercosur free trade agreement
After the setback in the negotiations on the EU-Mercosur free trade agreement, concrete measures from the new Government of Buenos Aires are impatiently awaited. Brussels and Brasilia failed to close the agreement at the Mercosur summit held last week in Rio de Janeiro, as expected.
For the new Milei government, this is both a blessing and a curse. On the one hand, it gives Argentina the opportunity to act as a savior of the idea of free trade, which Milei considers a basic prerequisite for economic success. On the other hand, the battered relationship between the President of Brazil, Lula da Silva, and Milei represents a serious test for Mercosur. Milei openly insulted Lula on several occasions and Lula interfered in the Argentine election campaign. Despite receiving a separate letter of invitation, Lula, who continued to campaign for dialogue to resolve international problems during his visit to Germany, stayed away from Milei’s inauguration. Milei, for its part, will continue to have a Peronist, Daniel Scioli, as ambassador in the important neighboring country.
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