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Javier Milei implements shock therapy in Argentina

New Argentina’s president Javier Milei and his government plans to cut spending by 3% of GDP. Will society tolerate it? Da The Economist.

When Javier Milei was sworn in as Argentina’s president on December 10th he told an audience: “There is no alternative to austerity.” Instead of rosy promises, he warned that tough times lay ahead. Announcing austerity upon taking office is usually political suicide in Argentina. Yet Mr Milei’s sombre message was received with cheers. Fans raised chainsaws into the air, in reference to his promise to cut down the size of the state.

The inaugural address set the tone for the shock therapy to follow. On December 12th Luis Caputo, the new economy minister, announced a flurry of radical economic reforms. He announced a devaluation of the peso by over 50%, and promised to slash electricity and transport subsidies, halve the number of government ministries from 18 to nine, suspend public works and reduce federal transfers to Argentina’s 23 provinces. The government reckons these cuts amount to almost 3% of GDP.

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