Javier Milei Endorses Luis Caputo and Economic Team in National Broadcast

In a national broadcast on April 24, 2024, Argentine presidential candidate Javier Milei endorsed Luis Caputo and his economic team. Milei praised Caputo's expertise and experience, expressing confidence in his ability to lead the country's economic recovery.

Caputo, a former finance minister, has been tapped to assemble a team of experts to tackle Argentina's pressing economic challenges, including high inflation, debt, and fiscal imbalances. Milei's endorsement of Caputo and his team is seen as a significant move, as the two have been political rivals in the past. However, Milei has recognized the need for a pragmatic and experienced approach to addressing Argentina's economic woes, and believes Caputo is the right person for the job.

Milei's economic team projects that monthly inflation in Argentina will slow to 3.8% by September, much faster than analysts anticipate. They also forecast the economy will contract 2.8% this year, less than the 3.5% drop seen by other analysts. The central bank also presented projections for Argentina's net international reserves, a key benchmark in the government's IMF program.

Why this matters: Milei's endorsement of Caputo and his economic team signals a shift towards a more pragmatic approach to addressing Argentina's economic challenges. The move could potentially unite rival factions and provide a clearer path forward for the country's economic recovery.

Milei has taken measures to combat inflation, including cutting various political expenses to achieve a zero deficit. Contrary to predictions, the exchange rate gap has narrowed, and inflation is expected to reach single digits in April, around 9%, and gradually decline further in the following months. Accumulated annual inflation is forecast to be around 150%, in line with IMF projections.

Despite the progress, factors like the high cost of goods and services and frozen salaries contribute to inflation inertia, which Milei's economic team is working to address. While the possibility of a devaluation in June or July is speculated, Milei is unlikely to pursue this path, as it would undo the progress made. Instead, the economic team may consider lifting currency controls, though this is contingent on building solid bank reserves, potentially through a new loan.

In his televised speech, Milei announced that the country's economy reached an AR$275 billion surplus in March, the first financial surplus since 2008. He reiterated his stance against public spending, stating that "private investment and credit financed by savings are the way to grow the economy." Milei promised to continue with his 'chainsaw' austerity plan, including cuts in cash transfers to provincial governments, a freeze on public works, and a reduction of the state structure.

Milei's endorsement of Caputo and his economic team comes amid significant progress in Argentina's economic recovery. The country registered a 0.2 percent surplus of its GDP during the first quarter of 2024, which Milei described as a "feat of historic proportions at a world level." He emphasized that the fiscal surplus is the cornerstone from which Argentina will build its new era of prosperity, despite opposition from the economic and political establishment.

Key Takeaways

• Milei endorsed Caputo's economic team to tackle Argentina's economic challenges.
• Milei's team projects faster inflation slowdown and less economic contraction in 2024.
• Milei's endorsement of Caputo signals a pragmatic approach to economic recovery.
• Argentina registered a GDP surplus in Q1 2024, a historic feat, per Milei.
• Milei vows to continue austerity measures, including cuts to public spending and state structure.