Anxiety and resignation in Argentina after Milei’s economic shock measures

BUENOS AIRES, Argentina (AP) — Julia González wonders how she will afford the three bus rides and train trip to her job in downtown Buenos Aires. Lucía Pergolesi regrets her best friend has been fired from her job in a government ministry. Hilario Laffite admits he will have to increase prices in the shop where he works.

These are some of the faces of anxiety that Argentines are dealing with after President Javier Milei’s administration announced economic shock measures aimed at tackling the country severe crisis, including a sharp devaluation of the peso by 50%, cuts to subsidies and the closure of some ministries.

Milei himself has warned people that these steps will cause some pain, but he insists they are needed to curb triple-digit inflation and have sustainable economic growth in the future. But concern is evident among people, even with those who support the self-declared “anarcho-capitalist” who took office as president Sunday.

Julia González, 35, is a Paraguayan national who has lived in Argentina for more than a decade. She is in favor of Milei, but she admits she is worried following the announcements.

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“If (the bus fare) goes up, my salary will be spent on transport,” González, the mother of a teenage girl, told The Associated Press as she waited at the bus stop. She works as a housemaid in downtown and uses public transport daily. She says she and her husband are “juggling” to make ends meet on a total income of 300,000 pesos ($365) a month.

But she also tries to be optimistic. “Milei has been here for two or three days. I will trust him, so that Argentina can move forward,” she said.

Milei, a 53-year-old economist who rose to fame on television with profanity-laden tirades against what he called the political caste, got enough support to become president among Argentines disillusioned with the economic crisis.

He took power of a country where annual inflation is running at 160.9%, four of every 10 people are poor and the trade deficit stands at $43 billion. In addition, there is a daunting $45 billion debt owed to the International Monetary Fund, with $10.6 billion due to be paid to the multilateral lender and private creditors by April.

Economy Minister Luis Caputo was the one who announced the economic steps Tuesday. He said the Argentine peso will be devalued by 50%, to 800 to the U.S. dollar from 400 pesos to the dollar. That puts it closer to the U.S. currency’s value on the parallel retail market — popularly known as the “blue dollar,” which is over 1,000 pesos.

He also announced cuts to energy and transportation subsidies without providing details or saying by how much. And he said Milei’s administration is reducing the number of government ministries from 18 to nine.

The actions were welcomed by some, including the IMF, but some economists warned of the short-term impact.

“These measures will come at the expense of substantial near-term pain, including a surge in inflation and steep contraction in GDP,” the economic consulting firm Capital Economics said in a report.

Hilario Laffite, who works in a designer gift shop, said he expects prices to soar.

“Every week I am asked to hike prices. It’s not that things are doubling, they are small increases — but there are so many that they all add up,” he said.

Others, like Lucía Pergolesi, are worried for the jobs people will lose.

“This crying face I have is because my best friend has just lost her job after joining the national Ministry of Culture last year,” she said.

The main union force in Argentina, the General Confederation of Labor, criticized the measures, saying they will mainly hurt regular people and not the political “caste” that Milei promised to purge. The confederation warned that it won’t stand by “with his arms crossed.”

Jorge Martínez, a 64-year-old painter, is one of those confident that the new government might improve things.

“I have faith in this government. if you don’t have hope — that’s it, we’re dead,” he said. “There is nothing left to do but to endure.”