The president’s reforms Javier Milei are “sensible” as long as they do not neglect the most vulnerable, because “there is no alternative” to fiscal adjustmenthe declared in an interview with AFP William Maloney chief economist of world Bank for Latin America and the Caribbean.
The Milei government is carrying out a draconian fiscal adjustment to reach the goal of zero deficit in public finances this year.
The adjustment, which includes a sharp reduction in public spending, foresees privatizations and even the closure of State agencies; It was accompanied by a devaluation of the peso that put even more pressure on inflation, which is around 280% in 12 months, although with a notable slowdown in the pace of price increases in the first two months of the year.
Question: Does the World Bank continue to support Milei’s fiscal adjustment despite the social cost?
Answer: Yes, the reforms are sensible but there must be help for the most vulnerable. I believe that fiscal balance is (the path) correct. It is a precondition for growth and for any society to have stability. No alternative. Argentina has long-standing fiscal adjustments that must be made. That is what is driving inflation. The question is how we can achieve fiscal adjustment while supporting the country’s most vulnerable population, and the bank is currently in talks about precisely those types of support mechanisms.
Q: How is this help going to be carried out?
A: “The bank is in dialogue with the government at the moment and we are exploring ways to help, in terms of the efficiency of social protection systems and strengthening support programs for food and employment.”
Q: How long do you estimate the adjustment will take?
A: The adjustment time depends a lot on the confidence that the population has that it will be sustainable. It also depends on how quickly the policies and credibility have been implemented, which is why it is important that there is support from society through Congress.
Q: President Milei has predicted two years of sacrifice. Do you think a short-term adjustment would be better, even given the response of the markets?
A: In general, the faster the measurements, the better.
Q: Could the country become a success story through fiscal adjustment or does it seem crazy to you?
A: Absolutely. Argentina has talent, it has human capital, it has a lot of well-developed industry, it has a first-class agricultural sector. But there is no country in the world that can grow with that inflation and volatility. Argentina has to achieve, like any other country, macroeconomic stability” because it is “a precondition for sustainable growth.
Source: Ambito
