Argentina’s newly elected President, Javier Milei, has lauded his country’s achievement of its first quarterly budget surplus since 2008 as a historic milestone.
Addressing the nation on Monday night via national television, Milei revealed that in the first quarter of 2024, Argentina recorded a budget surplus of approximately 275 billion pesos, equivalent to around $309 million at the official exchange rate.
This surplus accounted for 0.2 percent of the country’s GDP.
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“This is the first quarter with a financial surplus since 2008,” Milei proudly declared, taking a swipe at his left-wing predecessor, Cristina Kirchner’s initial year in office.
Milei, who assumed office in December, characterized the surplus as a remarkable global achievement. Emphasizing his economic ideology, the self-described “anarcho-capitalist” asserted that curbing inflation and achieving fiscal discipline were not magical feats but rather the result of prudent financial management.
The President’s victory in last November’s elections was fueled by promises to eliminate the deficit entirely, a goal more ambitious than the requirements set by the International Monetary Fund (IMF), with whom Argentina holds a $44 billion loan. To fulfill his pledge, Milei has implemented an austerity program, slashing subsidies for transportation fuel, and energy.
Despite Argentina grappling with annual inflation rates of 290 percent, a staggering 60 percent poverty rate, and a 20 percent decline in purchasing power for wage-earners, Milei remains resolute in his commitment to fiscal discipline.
The austerity measures have led to thousands of public servants losing their jobs, reflecting the administration’s stance against public spending as a solution to economic woes.
However, the government’s cost-cutting measures have sparked protests, with university students, unions, and opposition parties organizing a march to denounce financing cuts to higher public education, research, and science.
Universities have declared a budgetary emergency, citing stagnant funding levels amidst soaring inflation and energy costs. Ricardo Gelpi, the rector of the University of Buenos Aires (UBA), warned that without adequate funding, institutions could only sustain operations for a few more months.
However, positive signs of his austerity measures have been consistent. The South American country achieved its first monthly budget surplus in nearly 12 years in January. It recorded a positive balance for public-sector finances of US$589 million (approximately S$800 million) at the official exchange rate.
In addition to the removal of subsidies, the government made other major spending cuts.
Earlier this year, Presidential spokesman Manuel Adorni announced a government initiative to cut chauffeurs for public officials by 50%. Additionally, he revealed plans to sell two planes previously owned by the state-owned oil company YPF, citing their predominant use for what he described as “political privileges.”
“This is in addition to the reduction the government had already decided earlier this week […] We will continue to inform about the reduction of privileges every day,” he said. Adorni referred to the decision made earlier to decrease ministries by 50% and secretariats by 49%, aiming to curtail public spending.
These measures were expected to save nearly US$3 billion for the state.