(MENAFN) Argentina's newly elected president, Javier Milei, is set to implement bold and radical economic reforms, promising a form of "shock therapy" to address the country's economic woes, including one of the world's highest inflation rates and the looming threat of a recession, as reported by Bloomberg on Monday.
Having emerged victorious in the runoff election against Economy Minister Sergio Massa, Milei has outlined a transformative agenda for the Argentine economy. The proposed measures reportedly include the closure of the central bank, a shift from the peso to the United States dollar, and significant cuts in public spending. The ambitious vision also comes at a critical juncture for Argentina, facing a looming debt of USD44 billion owed to international bondholders and the International Monetary Fund in the coming year.
To navigate the financial challenges, Martin Castellano, head of Latin America research at the Institute of International Finance, suggests that the country will need "a big current account surplus amid a stabilization plan." This places Milei, a 53-year-old economist, former TV pundit, and one-time legislator without executive experience, in a position to address what is described as an "enormous" challenge, especially as state coffers are depleted, and inflation is approaching 150perecnt.
Milei, who had previously symbolized his proposed cuts by carrying a chainsaw, has recently set aside the symbolic tool to present a more moderate image. Despite the president-elect's bold plans, questions remain about the feasibility of certain proposals, such as dollarization, given the country's negative reserves. Bloomberg's Latin America economist Adriana Dupita notes that Milei's vision of a market-friendly, small-state, dollarized Argentina is poised to face its first significant test, with details on timing and processes for implementation yet to be clarified.
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