Argentine President Milei Announces Historic Budget Surplus Amid Austerity Measures

Argentine President Javier Milei, a self-described anarcho-capitalist, announced on Tuesday that his administration achieved a financial surplus of AR$ 276.638 billion (US$ 276.638 million) in the first quarter of 2024, calling it a "historical feat". This marks the first quarterly budget surplus in Argentina since 2008.

Milei, who took office in December 2023, instituted austerity measures including eliminating government jobs, reducing energy subsidies, cutting funding to public universities by 72%, and an 85% decline in capital spending in the first quarter.

The surplus represents 0.2% of Argentina's GDP. Milei described it as the "cornerstone of a new era of prosperity" for the country, which has faced an annual inflation rate close to 300%. His economic team projects monthly inflation will slow to 3.8% by September, faster than analysts' forecasts of 6.2%.

Why this matters: Argentina's achievement of a budget surplus under Milei's controversial austerity policies has significant implications for the country's economic future and social stability. The surplus provides a glimmer of fiscal hope for a nation long plagued by deficits and hyperinflation, but the steep cuts to government spending and jobs have sparked widespread protests and concerns about rising inequality.

However, Milei's austerity measures have faced criticism, with university students, professors, unions and opposition parties protesting the financing cuts to public education and other sectors. Hundreds of thousands have demonstrated against the proposed budget reductions. Despite the challenges, Milei remains committed to his goal of reducing the size of government and eliminating chronic deficits.

Key Takeaways

• Argentina achieved 1st budget surplus since 2008 in Q1 2024 under Pres. Milei.
• Milei instituted austerity measures, cutting govt jobs, subsidies, and university funding.
• Surplus represents 0.2% of GDP, seen as "cornerstone of new era of prosperity".
• Milei projects monthly inflation to slow to 3.8% by Sep, faster than analysts' 6.2%.
• Austerity measures face criticism, with concerns over sustainability and social impact.