The president of ArgentinaJavier Milei says that fiscal balance has become a “commandment” and that the country “will stop taking on new debt.”
This occurs in a context where Argentina has faced multiple defaults and currently has its debt market closed.
Milei made these statements during her speech at the Council of the Americas, which is holding its twenty-first edition at a hotel in Buenos Aires. This event is organized by Americas Society/Council of the Americas (AS/COA) in collaboration with the Argentine Chamber of Commerce and Services (CAC).
We are going to redesign the way the budget is written” because “our methodology is going to be called zero (fiscal) deficit”Milei anticipated, regarding the 2025 Budget bill that must be presented on September 15 in Congress,” he said.
Milei says Argentina allows new debt to be taken on
The ultra-liberal politician indicated that the primary result will be equivalent to the interest to be paid, which means that the financial result, that is, the primary result plus the interest on the debt will be zero, thus allowing the country not to need to take on new debt.
“Argentina stops taking on new debt,” Milei said, receiving applause.
“Once the zero deficit is reached, the debt-to-GDP ratio will not increase,” Milei warned, adding that “in the future, we should see a fall in country risk.” Currently, Argentina’s country risk stands at 1,545 basis points, which hinders its ability to issue debt on international markets.
The president recalled that 20 of the 22 crises Argentina faced in the 20th century were of fiscal origin. For this reason, he stated that his government has “a non-negotiable commitment to fiscal balance,” which has allowed it to reduce inflation, which currently stands at 271.5% annually until last June, by implementing a reduction in public spending that resulted in a fiscal surplus of 0.4% in the first half of the year.
“It is the first time in history” that Argentina has achieved a positive financial result “without being in default,” said the libertarian politician.
“We have made fiscal balance a mandate” that “transcends the change of management and endures over time,” he said, expressing one of the concerns of the business sector: that the reforms implemented by Milei are not reversed by a future successor of another political persuasion.
Regarding the private sector’s request to reestablish the free entry and exit of capital (or to eliminate the so-called exchange controls), the president rejected “the pressures, wherever they come from” and stated that “it makes no sense to make changes that cannot be maintained” and that “eliminating the patches without addressing the underlying problem will only aggravate the inherited crisis.”
Eliminating inflation “is essential to regain confidence” and “organizing fiscal and financial matters is a sine qua non condition for returning to growth.” He also stressed that “without a sustainable macroeconomy, everything else is ephemeral.”
(With information from EFE)
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2024-08-15 19:23:15
