“We made the largest fiscal adjustment in the history of humanity, five points in the treasury, ten in the Central Bank, we reached balance in the treasury in the first month, the balance of the Central Bank In the sixth month we eliminate the quasi-fiscal. That was not in anyone’s books and today it is a source of admiration for the world,” he celebrated in an interview with Forbes magazine.
Javier Milei talked about deflation and projected a reduction in the crawling peg
When delving into the hard data of the economy, the economist spoke about the evolution of inflation and, as he did in recent interviews, he once again pointed out that Argentina is in deflation, if the wholesale index is taken into account.
“In December we received wholesale inflation traveling at 54%, equivalent to 17,000% annually. The last data was 1.4%, that is, a little more than 15%. We substantially lowered the rate. At the same time, we have a crawling peg with 2% monthly, plus international inflation, which today says that in terms of wholesale inflation we come to a rate of deflation of 1% monthly“, he said. He also assured that “when the crawling peg is cleared, 1% monthly, that’s deflation of 13% annually“.
Along these lines, the president also stated that in the spectrum of inflation that impacts the consumer, the index is around zero, if the crawling peg is discounted from the CPI data. “You can tell me “the consumer (price index) is at 2.4%. So it is almost in line with the crawling peg. So, we are at 0 inflation.”
Then, he made the same comparison with respect to the prices of goods and services: “If I do the decomposition in the CPI between goods and services, where services are very strongly impacted by tariff adjustments, the inflation of goods comes to 1.6% and services at 4.4%. We are fixing the disaster left by Kirchnerism of having used rates in a political sense to try to curb inflation. In that context, goods would come with an inflation of around 1%. 0.9%, which means we are also in deflation. In terms of food and beverages, you are at 0.9%, a much deeper deflation.”
If the downward trend continues, the president announced that they will make changes to the BCRA’s devaluation policy. “The program generates an induced inflation of 2.5% monthly. To the extent that we repeat another month with inflation around 2.5% monthly, it enables us to lower the crawling peg at 1% and there we are going to have a target inflation of 1.5%.”
If the fall in the inflation rate persists, Milei stated that a new exchange rate scheme could be adopted. “We would be in a position to go to a part already linked to clean floating. And if we solve the Central Bank’s stock problem and the monetary base in the traditional format coincides with the broad monetary base, we are in a position to open the stocks”.
When asked if compliance with the three conditions is a necessary condition to release the stocks, the president responded affirmatively. “Those three goals have to be met so that we can open the stocks knowing that it will not generate instability in the demand for money. That is the central axis.”
Milei denied an exchange delay
In another passage of the interview, the president referred to the appreciation of the Argentine currency against the dollar and the real, at a time when the number of Argentines vacationing in Brazil is growing. Along these lines, he denied that the country is suffering from an exchange rate delay as economists point out.
“On the specific discussion of whether there is an exchange rate delay, first point: one way that reflects that you have an exchange rate delay is that you have a fixed exchange rate and you lose reserves,” he said and, as he maintained, Argentina “in the last year bought about US$25,000 milliontherefore, that would not be the case.”
“Another indicator of exchange rate delay is that you cover it with debt. Argentina in the last year canceled debt for US$35,000 million,” he assured and added: ““We would have to look in textbooks to see when Argentina lowered so much debt in its history.”
Finally, another symptom of a delayed exchange rate is “that you are supporting the dollar by raising the interest rate. We received the Argentine economy with an interest rate of 235% and today it is 35%. Therefore, there are none of them. the mechanisms with which you generate exchange appreciation”.
On the other hand, he referred to the possibility that Argentina and the United States sign a free trade agreement. For the President, the intention is for it to happen in his first term. “It’s the goal,” he said.
The signing of a treaty with the US could have consequences within Mercosur. In that sense, Milei, Currently pro tempore president of the bloc, he raised the need to reduce external tariffs and open up commercially to the world. “I’m not saying leave Mercosur, what I’m saying is changing the conditions under which we relate because we are all harming ourselves. Within that agenda, we are going to advance a free trade agreement.”
Javier Milei detailed his 2025 agenda: privatizations, labor and pension reform and his plan to remove 90% of taxes
The president also spoke again about his government’s plans for 2025 and confirmed that he will move forward with a plan “deep chainsaw” and that has more than 3,000 pending reforms. Furthermore, he said that next year’s axes will be the deepening of the labor and pension reforms, the completion of privatizations and the elimination of 90% of taxes.
“We are going to continue removing regulations. This year we increased 70 positions in economic freedom. We went from the batch of the worst 35 to the middle. And we only applied a quarter of the reforms, we still have 3,200 pending. We are going to remove them to the extent that Congress allows us,” the head of state said at first.
To then reveal that in 2025 “we are going to advance in a privatization agenda and in a deepening of the labor reform. To the extent that the labor reform comes out, we can advance in a pension reform.”
In that sense, in an interview with Forbes, Milei highlighted the modifications that he was able to introduce thanks to the approval of the Bases law and stated that his objective is to “expand the market from 6.5 million to 14.5 million people.” In this way, “the pension numbers change dramatically in favor of retirees having better retirements.”
In another fragment he praised the measures taken in his first year in office. “We are eliminating inflation, which is eliminating the distortion of relative prices and that favors the accumulation of capital. We are lowering taxes. We made 800 structural reforms. Every day we remove regulations,” he said.
Then he highlighted that “we made a first big cut and now we are going to the deeper things, which is not only deregulating and removing these obstacles, but also implies a new reform of the State to shrink it even further.”
At the end of the interview, the president told what his wish is for the end of his presidential term: “My dream is that, when I finish my performance in public office, Argentina will be the freest country in the world. I am not going to rest a minute to secure it.”
Source: Ambito
I am an author and journalist who has worked in the entertainment industry for over a decade. I currently work as a news editor at a major news website, and my focus is on covering the latest trends in entertainment. I also write occasional pieces for other outlets, and have authored two books about the entertainment industry.
