By Nicolás Misculin and Miguel Lo Bianco
BUENOS AIRES (Reuters) – Argentina will swear in libertarian economist Javier Milei as president on Sunday in a sharp swerve for the South American country as it seeks a radical fix for the worst economic crisis in decades and inflation rapidly heading towards 200%.
Milei, 53, a former TV pundit who shot to fame with expletive-ridden tirades against rivals, China, and the pope, will take the presidential sash already showing some signs of a pragmatic and moderate shift since his election win last month.
The wild-haired outsider, however, marks a major gamble for Argentina: his shock therapy economic plan of sharp spending cuts has gone down well with investors and could stabilize the embattled economy, but it risks pushing more people into hardship with over two-fifths already in poverty.
However, voters – who drove Milei to victory in a November run-off against a ruling Peronist coalition candidate – said they were willing to roll the dice on his sometimes radical ideas that include shutting the central bank and dollarizing.
“He is the last hope we have left,” said 72-year-old doctor Marcelo Altamira, who slammed “useless and inept” governments for years of boom-bust economic crises. The outgoing Peronist government, he said, “had destroyed the country”.
The challenges are huge. Argentina’s net foreign currency reserves are estimated at $10 billion in the red, annual inflation is 143% and rising, a recession is around the corner and capital controls skew the exchange rate.
Argentina has gone through boom-bust cycles for decades with money printing to fund regular deficits stoking inflation and weakening the peso. That’s worsened in recent years as reserves have dwindled with a major drought earlier this year hitting main cash crops soy and corn.
The grains producing country needs to revamp a creaking $44 billion loan program with the International Monetary Fund (IMF), while Milei needs to navigate ties with important trade partners China and Brazil, whom he criticized during the campaign.
Milei will take over from unpopular outgoing center-left President Alberto Fernandez, but will need to negotiate with rivals as his libertarian coalition only has a small bloc in Congress. He has allied with the main conservative grouping.
That’s already had an impact. He has moderated his tone in the last few weeks, packed his first Cabinet with mainstream conservatives rather than ideological libertarian allies, and put more radical ideas like dollarization onto the back burner.
That’s helped buoy the markets and reassure voters.
“I think he will do well. For legal and Congressional reasons he’ll end up having to focus on more coherent things,” said Laura Soto, 35, a restaurant employee in Buenos Aires.
She said some more radical social ideas he had talked about during the campaign were also unlikely to happen, including easing regulation on guns and reopening the debate on abortion, which was legalized in Argentina three years ago.
‘CHANGE WAS NECESSARY’
To fix the economic mess, Milei has chosen mainstream conservative Luis Caputo to helm the economy ministry, with a close Caputo ally Santiago Bausili as the central bank chief.
Milei is expected to lay out his vision in a speech on Sunday, with a more detailed economic plan likely on Tuesday or Wednesday, sources from his team told Reuters.
The ceremony is expected to include Ukranaian President Volodymyr Zelenskiy and Hungarian Prime Minister Viktor Orban. Right wing former Brazilian leader Jair Bolsonaro will be there, as will a U.S. delegation.
Chile’s leftist President Gabriel Boric and Uruguay’s conservative leader Luis Lacalle Pou are on the guest list, but leftists Luiz Inácio Lula da Silva of Brazil and Mexican Andrés Manuel López Obrador will be some of the major absences.
Attentive to the popular support that’s driven his rise , Milei is expected to speak to his supporters outside Congress, instead of doing so to lawmakers inside as is customary.
“He gives us something, the people, not the politicians,” said retiree Vilma Bonino, 73. “Now we need to see what happens.”
In a sign of challenges ahead, state energy firm YPF hiked petrol pump prices this week by an average 25%, with analysts and markets anticipating a sharp devaluation of the over-valued peso currency shortly after Milei takes office.
“Things aren’t in good shape currently and it seems to me that a change was necessary,” said 22-year-old student Delfina Ortiz as she took a photo in front on Congress.
“Obviously, like all change, there is a lot of hope and expectation for what is to come. Hopefully it will be good.”
(Reporting by Nicolas Misculin and Miguel Lo Bianco; Additional reporting by Jorge Otaola, Walter Bianci and Candeleria Grimberg; Editing by Adam Jourdan and Shri Navaratnam)
