Argentina Achieves First Budget Surplus Since 2010 Amid Staggering Challenges

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Argentina's President Javier Milei announced on January 18, 2025, that the country has achieved its first budget surplus since 2010. This announcement coincided with his implementation of a drastic economic plan, termed "shock therapy," aimed at stabilizing the nation’s economy. Amid ongoing high inflation and a deepening recession, Milei declared on social media that "the promises have been fulfilled" and touted the successful establishment of a "zero deficit" budget.

Milei's fiscal strategy has been marked by significant cuts to public spending, including reductions in social programs and subsidies, as well as the dismissal of numerous public sector employees. These measures, designed to rein in government expenditure, resulted in a projected revenue increase of 0.3% of GDP for 2024, according to Economy Minister Luis Caputo.

However, the austerity measures have had severe social repercussions; the inflation rate remains high at 117.8%, making Argentina one of the countries with the highest inflation globally. Furthermore, five million additional citizens fell below the poverty line in the first half of 2024, leading to 52.9% of the population now living in poverty, with extreme poverty increasing from 11.9% to 18.1%.

Despite the criticisms of his economic policies and the immediate suffering they have inflicted, Milei maintains that these tough measures are essential for long-term recovery, predicting a GDP growth of 5% in 2025. The country is also engaged in challenging negotiations with the International Monetary Fund (IMF) over a new support program after the previous $44 billion aid package expired. Milei is scheduled to meet with IMF Director Kristalina Georgiewa in Washington prior to the inauguration of the newly elected US President Donald Trump.

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