President Milei’s Austerity Budget Sparks Tensions, Sets Stage for Political Clash in Argentina
Libertarian President Javier Milei has ignited a political firestorm with his 2025 budget proposal, outlining a radical path towards fiscal austerity and setting the stage for a showdown with Congress, The Associated Press reports.
In an unprecedented move, Milei personally presented the budget to Congress, bypassing his economy minister to directly address lawmakers. He delivered a scathing critique of Argentina’s history of economic mismanagement, vowing to veto any legislation that undermines his commitment to a “zero deficit” budget, supported by the International Monetary Fund (IMF).
The proposal comes amidst a week of intense political clashes in Congress, where Milei’s influence is limited. Opposition parties have sought to pass legislation raising salaries and pensions to alleviate the impact of austerity on struggling Argentines facing high inflation.
Milei, however, remains undeterred.
“The cornerstone of this budget is the first truth of macroeconomics… that of zero deficit,” he declared, “Managing means cleaning up the balance sheet, deactivating the debt bomb that we inherited.”
The opposition, primarily the Peronist bloc, Unión por la Patria, largely boycotted Milei’s speech, leaving many seats empty. Yet, Milei’s supporters erupted in cheers and applause during his presentation.
The budget’s fate now lies in the hands of Congress, where weeks of contentious negotiations are expected. Milei’s political isolation complicates matters, with opposition parties seeking concessions while Milei has vowed to stand firm on his austerity measures.
Over the past nine months, Milei has implemented dramatic public spending cuts, leading to a fiscal surplus, a rarity in Argentina. However, this has come with a heavy price: poverty levels have surged to nearly 60%, up from 44% when Milei took office.
The recent battle over a bill to increase social security spending, ultimately vetoed by Milei, ignited protests from angry retirees who have seen their purchasing power dwindle amidst high inflation.
Despite the economic hardship, Milei has managed to maintain some public support by successfully keeping monthly inflation in check. While Argentina’s annual inflation hovers around 237%, the monthly rate has dropped to 4% since its peak of 26% last December.
The Finance Ministry remains optimistic, predicting an annual inflation rate of 18% by the end of 2025 and 5% economic growth. However, Argentina’s economy contracted by over 3% in the first half of 2024.
The road ahead for Milei is paved with majr obstacles. Congress dealt him a blow last week by passing a bill increasing spending on public universities, a move Milei vowed to veto.
Additionally, Congress rejected his plan to raise spending on intelligence services. Despite all the belt-tightening, Milei has committed to increasing defense spending from 0.5% of GDP to 2.1%, a move that has sparked concern among some lawmakers.
