Argentina cuts spending and has a monthly surplus for the first time in 12 years, but suffers from poverty and rising inflation

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President Javier Milei celebrated the result on social media, and predicts a recovery of the economy in around three months. Inauguration of President Javier Milei in Buenos Aires on December 10, 2023 Agustin Marcarian/REUTERS The Argentine government announced, on Friday night (16), that it achieved a fiscal surplus in January for the first time in almost 12 years. A surplus occurs when government revenues are greater than expenses. Since taking office, ultra-liberal president Javier Milei has implemented strong spending-cutting measures in the country. The balance for Argentine public sector finances was positive in the first full month: the surplus was around US$589 million (R$2.93 billion at the official exchange rate). The figure also includes interest payments on public debt. It is the “first financial surplus [mensal] since August 2012 and the first financial surplus in a January since 2011”, indicated the country’s Ministry of Economy. Zeroing the public deficit is the main goal of Milei’s administration. To this end, the government has been reviewing subsidies and halting investments public funds in the country. The idea is to rebuild international reserves to ward off the crisis of confidence among international investors and rebalance the exchange rate. Furthermore, Argentina maintains a loan agreement worth US$44 billion (approximately R$219 billion) with the Monetary Fund International (IMF), which foresees the reorganization of the economy. The imbalance caused inflation in Argentina that exceeds 250% in 12 months, according to the official statistics institute, Indec. This is one of the highest interannual variations in the world Poverty affects 45% of the population, according to official data.A study, initially published by the newspaper Ámbito Financiero, projects even higher numbers: 57.4% of Argentines living below the poverty line, more than 26 million people. Milei suffers major defeat after failing to approve legislative changes in Argentina Milei celebrated the result The Argentine Economy Minister, Luis Caputo, commented on the result in a post on the social network X (formerly Twitter). “Zero deficit cannot be negotiated,” he said. “Vaaaamoos Toto!”, replied Milei on the same social network in reference to Caputo, and then added his campaign motto, which also became his government’s slogan: “Long live freedom, man!” With inflation numbers rising and poverty increasing, management is betting on a worsening of indicators over the next three months. “It will be like a kind of ‘V’, a first moment of decline, with the most difficult period around March and April, which is when it will reach the bottom and, from there, it will begin to recover. And when the ‘stump’ [restrições ao acesso a dólares que se mantém desde 2019], the economy will soar”, estimated Milei. Also on Friday (16), the president refused the possibility of establishing a new minimum wage that would compensate for the annual inflation of 250%. The CGT, the main Argentine trade union, with an opposition orientation , asked the Minimum Wage Council for an 85% increase. “I don’t believe that a politician can set a price by hand. It doesn’t even cross my mind. Am I going to issue a decree setting a price?”, said Milei, after the Council’s failure to increase the current value of 156 thousand pesos (R$928, at the current official exchange rate). Milei states that the minimum wage is “an issue that must be addressed by workers and employers”, without intervention from the State. * With information from the agency France Presse

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