Newcomer Milei’s Austerity Is Devastating Argentina

[BASally]

Is this real? Are Argentines that bad off?

Milei’s Austerity Is Devastating Argentina

Shock therapy is pushing more people into poverty.

foreignpolicy.com

People are starving? More people are living in destitution? 😥

 

[Betsy Ross]

Is this real? Are Argentines that bad off?

Milei’s Austerity Is Devastating Argentina

Shock therapy is pushing more people into poverty.

foreignpolicy.com

People are starving? More people are living in destitution? 😥

I can't read the article. It is behind a paywall. The trainwreck with the economy was already in progress for the past many years. If it weren't for Milei we would be in hyperinflation. No doubt the poverty levels is a sad situation but Milei did not cause this.

 

[Digital Nomad]

Where were all these articles for previous Presidents that devasted Argentina?

 

[GlasgowJohn]

I can't read the article. It is behind a paywall. The trainwreck with the economy was already in progress for the past many years. If it weren't for Milei we would be in hyperinflation. No doubt the poverty levels is a sad situation but Milei did not cause this.

Milei’s Austerity Is Devastating Argentina​

Shock therapy is pushing more people into poverty.​

By Lautaro Grinspan, a journalist from Argentina.

An unhoused man sits outside Argentina’s Ministry of Human Capital during a protest against food scarcity. He carries his belongings in a shopping cart, leaning his arms against it as he watches the proceedings. Behind him, riot police stand in a line, holding their riot shields in front of them.
An unhoused man sits outside Argentina’s Ministry of Human Capital during a protest against food scarcity at soup kitchens and President Javier Milei’s austerity plan in Buenos Aires on Feb. 23. TOMAS CUESTA/AFP VIA GETTY IMAGES
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MARCH 5, 2024, 11:31 AM
On a recent evening, Micaela Maldano unfurled a blanket in a public park in El Jagüel, a poor suburb of Buenos Aires. On it, the 28-year-old arranged used clothes, a mate tea gourd, and a backpack—secondhand household goods she hoped to trade directly for food. “It’s getting harder and harder to eat,” Maldano said. “There are tons of people who are hungry.” She called the taste of meat, an Argentine staple, a “distant memory.”
Maldano is not alone. More Argentines are resorting to desperate measures such as bartering to put food on their tables as the country weathers an economic crisis. Financial tumult has long been part of life in Argentina, which ended 2023 with an annual inflation rate of more than 200 percent. But humble households such as Maldano’s have fallen into deeper precarity since far-right libertarian President Javier Milei was inaugurated last December. Maldano rents an apartment with her boyfriend, and the two rely mostly on his salary and informal trades to get by.
Days after taking office, Milei devalued the Argentine peso by more than 50 percent, and already sky-high inflation rates ascended even further. Since then, the cost of gas in Argentina has roughly doubled. Food prices have risen by roughly 50 percent, according to official government data. Health care costs have increased at a similar clip. Around the two-month mark of Milei’s presidency, Argentina’s annual inflation rate topped 250 percent, surpassing that of Venezuela to become the highest in Latin America.
As the price hikes intensified, Milei slashed subsidies for services ranging from transportation to utilities, honoring his campaign pledge to take a metaphorical “chainsaw” to public spending. The move put even more pressure on Argentines’ pocketbooks.
On the campaign trail, Milei—a political outsider—suggested abolishing Argentina’s central bank and dollarizing its economy, outlandish proposals that raised eyebrows among observers. But in office, his strategy has so far been more conventional: a fiscal adjustment plan designed to reverse longstanding government deficits through budget cuts and tax hikes. The president has described his austerity package, a significant departure from the Argentine tradition of reckless government spending, as “shock therapy.”


“It’s a fairly traditional approach to stabilization,” said Benjamin Gedan, the director of the Latin America Program at the Wilson Center. “That doesn’t mean it’s not dramatic and high stakes. … It’s an act of either political courage or political suicide.”
For everyday citizens, Milei’s austerity has been devastating. Salaries and pensions have not come close to keeping up with inflation. Workers’ purchasing power fell by roughly 14 percent month-over-month at the end of 2023, a contraction not seen in decades. Demand for food at soup kitchens is surging. A study released earlier this month from the Catholic University of Argentina estimates that the country’s poverty rate surpassed 57 percent in January. According to the same group of researchers, 49.5 percent of Argentines lived in poverty in December 2023, when Milei took over. At the end of 2022, 43.1 percent were considered poor.
Sebastián Menescaldi, an economist and the director of the Buenos Aires-based EcoGo consultancy, forecasts that the most painful period of Milei’s economic shock is yet to come. Starting this month, utility price hikes will combine with back-to-school costs to wallop families’ bottom lines. (In Argentina, summer breaks run from Christmas through February.) In March and beyond, “people will feel like they are drowning,” Menescaldi said.
As average Argentines suffer, Milei’s strategy has yielded some positive macroeconomic indicators. The peso devaluation has made imports more expensive, slowing them down—and decreasing the amount of money flowing out of Argentina. As a result, the cash-strapped central bank has started replenishing some of its dwindling dollar reserves. Meanwhile, the government posted an elusive budget surplus in January. And although monthly inflation reached a crushing 20.6 percent that month, it was lower than December’s rate of 25.5 percent.
But experts agree that the fiscal adjustments that made those trends possible could provoke a looming recession; Milei’s spate of spending cuts, they argue, will choke economic growth. The Institute of International Finance, an association of global financial firms, is predicting that the Argentine economy will contract 7.8 percent in the first quarter of this year. The International Monetary Fund, meanwhile, forecasts a 2.8 percent annual contraction.
Milei’s administration hopes that a recession will prove short-lived, but Menescaldi said that is unlikely. The economist is forecasting a “strong” upswing in unemployment and a further rise in the poverty rate. Because a gap persists between the official peso-dollar exchange rate and the black-market rate used by most Argentines, Milei might institute another inflationary currency devaluation in the future. Contributing to Argentina’s uncertainty are the governance challenges facing Milei, whose fledgling libertarian party occupies a minority of seats in Congress and holds no provincial governorships.

 

[GlasgowJohn]

Is this real? Are Argentines that bad off?

Milei’s Austerity Is Devastating Argentina

Shock therapy is pushing more people into poverty.

foreignpolicy.com

People are starving? More people are living in destitution? 😥

Things are tough , but the measures had to be taken! Awaiting this weeks official February inflation figures to see how thing really are.

 

[GlasgowJohn]

Where were all these articles for previous Presidents that devasted Argentina?

the "journalists" were getting paid to ignore reality.

 

[Avocado]

Things are tough , but the measures had to be taken! Awaiting this weeks official February inflation figures to see how thing really are.

Some thing need to change. I agree. But the thing of making poor and middle class pay the most is not the solution. This will backfire once the people get so angry. You will see blood in street.