Argentina: Javier Milei completes his cabinet and announces “stagflation”.

Buenos Aires. Shortly before his inauguration on December 10, right-wing Argentine President-elect Javier Milei, from the La Libertad Avanza (LLA) party, appointed other key members of his cabinet and defined the orientations of foreign and economic policy.

Economist Luis Caputo will join the Ministry of Economy preside. This 58-year-old man, who has worked for a long time in the banking and financial sector (notably at Deutsche Bank), was for a year Minister of Finance under Mauricio Macri (2015-2019) and briefly president of the central bank. Milei based his choice on his expertise in financial reforms.

According to Milei, “a large part of the central bank’s budget deficit” is generated by the issuance of so-called Leliqs. The “Liquidity Letter” (Leliq) is a bond or loan with a maturity of 28 days which is only accessible to banks. The objective is to provide more liquidity to economic actors without increasing the money supply in circulation. Leliqs’ interest rate (currently above 130 percent per annum) serves as a benchmark for other interest rates such as business or consumer loans.

According to Central Bank data, the debt accumulated with Leliqs amounts to $14.2 billion, or more than ten percent of gross domestic product (GDP). As a remedy, Milei announced during the election campaign that the central bank would be abolished and the economy would be dollarized. It is not certain that there will be a parliamentary majority for this.

At the same time, Milei announced that Argentina would experience “stagflation” (estanflación) due to its fiscal and financial policy measures, with “negative effects on the economy.” The term describes a decline in economic activity accompanied by an accelerated rise in prices, with devastating consequences for the poor majority.

In order to cushion structural reforms, additional spending would be reserved for the new Ministry of Human Capital, which will bring together the areas of education, labor, health and social development, in order to “contain the suffering of those who are confronted”. difficulties due to economic measures.” According to Milei, inflation will remain high because it is the result of the “catastrophe caused by the previous government.” His objective is to stop the issuance of currency “so that inflation ceases in a period of 18 to 24 months.

He also presented his reform plans in Washington last week. The US government received this “extremely positively”, he said afterwards. Milei also stressed that he had expressed his “historical closeness to the United States, Israel and the West.”

It was previously announced that economist Diana Mondino would be the new foreign minister. In October 2023, she won a parliamentary mandate for LLA in the city of Buenos Aires. Mondino expressed hope that the new agreement between Mercosur and the European Union would be signed soon. Foreign trade regulations must be abolished because “the dollars belong to the exporters and not to the central bank,” Mondino said.

She also assured that Argentina “will not join” the Brics group (Brazil, Russia, India, China, South Africa). At a conference of the Argentine Industrial Association, she said: Reasonthat she and Milei see “no advantage” in it.

Conservative politician Patricia Bullrich will head the Security Ministry. Bullrich, eliminated in the first round with 23.8 percent of the vote, will return to the position she already held under Macri.

Milei will be LLA MP Maria Eleonora Urrutia as Secretary of State for Education appoint. Urrutia is married to Hernán Büchi, former Minister of Economy of Chile (1985–1989) and candidate for Augusto Pinochet’s ruling party in the 2021 presidential elections. She is a lawyer and has distinguished herself as a terrorism denier. State and the crimes of the military dictatorship.

SO designated In 2018, she described the 1976 coup as a “peaceful military uprising” enjoying the “unrestricted support of all political parties, personalities and civil society groups of all ideologies”. She even reaffirmed that the dictatorship had not committed any crimes against humanity “because at the time of the events, there was no law in force providing for crimes against humanity.”

According to Urrutia, these crimes did not exist “because they were not attacks against civilians, but against populations in combat.”

Rosemary Rowse

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