Right-wing libertarian Javier Milei vowed to ‘rebuild’ Argentina’s battered economy after sweeping to victory in the country’s presidential elections.
The former TV pundit beat economy minister Sergio Massa with 56 per cent of the vote having promised to take a chainsaw to public spending and ‘burn down’ the central bank.
‘Today starts the rebuilding of Argentina,’ the 53-year-old declared. ‘There’s no room for gradual measures.’
His plans will be put to the test when Argentina’s financial markets resume trading today following a public holiday yesterday.
South America’s second-largest economy is crumbling under inflation of 143 per cent and a looming recession.
Eccentric: Argentina’s new president Javier Milei (pictured) beat economy minister Sergio Massa with 56% of the vote having promised to take a chainsaw to public spending
Four in ten Argentinians live in poverty and the country is the International Monetary fund’s largest debtor.
Milei, who carried a chainsaw during his campaign to symbolise his planned cuts, has pledged to dollarise the economy and get rid of the peso as part of his blueprint to shake Argentina out of its malaise.
Dollarisation would see Argentina tie its currency to the US in a bid to stabilise the economy.
The politician, who has been compared to former US president Donald Trump, must appoint a minister to head the central bank he, just weeks ago, said he wanted to burn down.
However, Juan Manuel Pazos, chief economist at Buenos Aires-based financial services group TPCG, said Milei’s first post-election speech set the ‘right tone’ and carried the ‘right message’.
He added: ‘Milei said that he is going to reorganize the central bank instead of imploding it or shutting it down. That detail is important.’
Hans Humes, chief investment officer at Greylock Capital Management, said Milei will achieve more than people expected.
‘A lot of people don’t think dollarisation is workable,’ said Humes. ‘I think he will do it. It will take a bit of work.’
Sergio Armella, an analyst at Goldman Sachs, said: ‘It is indisputable that a swift change from the failed economic policies of the past is imperative.
‘The accumulated imbalances in the economy have grown too large and must be addressed promptly.’
He said Argentina needs a responsible independent central bank ‘free from the grip of fiscal dominance’, financial liberalisation, and structural reforms to ‘make the economy more open, productive, and flexible’.
Jefferies analysts Alejandro Anibal Demichelis and Pedro Baptista said Milei’s victory should ‘bring positive changes to the country’, such as reducing the budget deficit and removing frictions in the economy.
‘But they added that the measures are ‘unlikely to be easy or quick’.
‘To us, governability and risk of social unrest are key concerns as the new administration’s push to remove relative price distortions, subsidies, particularly on energy and food, and FX controls could accelerate inflation and the devaluation of the currency near term,’ the analysts said.
As a popular tourist destination, Argentina’s economy is driven by the services industry but its agricultural and industrial sectors are also important to the financial system.
The country’s main exports are maize, soya beans and soy oil, wheat and cars, according to the World Bank.
The South American country, however, has been trapped in a long-running economic crisis, with decades of persistently high inflation.
However, price growth soared after the pandemic to hit a 30-year high in February this year.
