Argentina economic surgery
reported by Mehr News, Reza Mousai, an economic expert, wrote in a note for Mehr: These days, economic circles talk a lot about the economic reforms of Argentina under President Xavier Milli, and in a way Persuading the economic policymakers of the country to copy it, in this regard, we will express and examine them in a few analytical notes.
These reforms from 2023 include several key measures as follows:
The severe devaluation of the Peso: one of the first measures of the sudden devaluation of the peso which reached more than 50% in one day. This action was taken to address the big gap between the official exchange rate and the free market, which was to prevent corruption and economic rent.
Cut government spending: Milli introduced reforms such as cutting energy subsidies, canceling public works tenders, and reducing the number of government ministries. These measures were carried out with the aim of reducing the budget deficit and increasing the efficiency of the government.
Privatization: The Milli government tried to help increase productivity and competitiveness in the economy by privatizing various sectors, including state-owned industries.
Contraction policies: With the aim of controlling inflation, contraction policies were implemented, which included reducing the printing of unbacked money.
Analysis of the effects of the measures:
Positive: Decreasing inflation: After the implementation of reforms, Argentina’s monthly inflation reached its lowest level in the last three years and the difference between the official exchange rate and the free market decreased.
Budget surplus: With spending cuts and structural reforms, Argentina was able to achieve a budget surplus, a major achievement after years of budget deficits.
Investment attraction: Economic reform programs have made bond markets more confident in Argentina and investors are less worried about defaulting on debts.
Negative:
Poverty increase: These reforms have been accompanied by a significant increase in the percentage of the population below the poverty line. Actions such as removing subsidies and reducing social support have made the situation of the poor worse.
Unemployment: Despite the decrease in the unemployment rate in some statistics, economic changes still caused many people to lose their jobs, especially in the public sector.
Public dissatisfaction: social and political resistances, including trade union protests, indicate the dissatisfaction of a part of the society with these reforms.
Finally, these two reforms They have aspects: on the one hand, macro economic improvements and on the other hand, negative effects on people’s daily life. The success of these reforms will depend on the balance between these two aspects, and it is necessary for every country to pay great attention to them based on its social issues.
