Milei unveils 2025 budget in Argentina, promises austerity measures

In an unprecedented move, Javier Milei, the Libertarian President of Argentina, presented the 2025 budget directly to Congress, emphasizing his commitment to austerity measures aimed at eliminating the country's fiscal deficit. This presentation followed a week of political clashes in the legislature, where Milei's administration faced opposition over proposed spending increases that could jeopardize their IMF-backed 'zero deficit' budget. With less than 15% control of Congress, Milei's political isolation complicates negotiations with lawmakers who demand concessions. Milei's budget proposal reflects his determination to maintain strict fiscal discipline, despite the deep economic pain experienced by many Argentines, with nearly 60% now living in poverty. His administration has achieved a fiscal surplus for the first time in nearly two decades by implementing significant cuts to public spending, including reductions in financial transfers to provinces and the elimination of energy and transport subsidies. However, these measures have led to widespread discontent, particularly among retirees who have seen their purchasing power eroded by soaring inflation. Despite Argentina's annual inflation rate hovering around 237%, Milei has managed to reduce monthly inflation to 4% since taking office. However, the economy contracted by over 3% in the first half of 2024, raising concerns about the sustainability of his policies. The recent rejection of a bill to increase social security spending and the failure to pass a budget that includes increased funding for intelligence services highlight the challenges Milei faces in Congress. As negotiations continue, Milei remains steadfast in his approach, vowing to veto any spending increases that do not come with corresponding cuts. His confrontational stance suggests that the path ahead will be fraught with difficulties, as he seeks to implement his austerity agenda amidst growing opposition and economic hardship.