Yellen Praises Milei-Led Argentina for Heading Toward ‘Restoring Fiscal Sustainability’

The Treasury secretary’s remarks follow days after Javier Milei exchanged hugs with former President Donald Trump.
Yellen Praises Milei-Led Argentina for Heading Toward ‘Restoring Fiscal Sustainability’
U.S. Treasury Secretary Janet Yellen speaks at an Asia Society Policy Institute event at the Mayflower Hotel in Washington, on Nov. 2, 2023. (Drew Angerer/Getty Images)
Andrew Moran

U.S. Treasury Secretary Janet Yellen praised Argentine President Javier Milei and his government on Feb. 29 for taking the necessary steps toward “restoring fiscal sustainability.”

Ms. Yellen met with Argentina Economy Minister Luis Caputo in Brazil during a gathering of G20 finance ministers and central bank governors.

Ahead of her meeting with Mr. Caputo, the U.S. official championed the “important steps” that Mr. Milei and his team are employing to resuscitate the South American nation.

“The Milei administration has inherited a steep stabilization task, but has already taken some important steps toward restoring fiscal sustainability, adjusting the exchange rate, and combating inflation,” Ms. Yellen said in prepared remarks.

She added that she accepts there will be “a difficult economic transition period for the Argentine people” and that shielding the most vulnerable during this span “will be a challenge but is vitally important.”

In November, the Argentine president met with senior administration officials, including White House national security adviser Jake Sullivan.

According to a readout, Mr. Sullivan and Mr. Milei discussed economic issues and “shared priorities such as investing in technology and clean energy, advocating for human rights, and standing up for democracies around the world.”

The self-described anarcho-capitalist economist recently sat down with Secretary of State Antony Blinken at the Casa Rosada Presidential Palace in Buenos Aires.

During a news conference, the top U.S. diplomat stated that Mr. Milei’s work to stabilize the economy “is absolutely vital” and described the meeting as “incredibly positive.”

“We see extraordinary opportunity here in Argentina, but maybe most important, what’s so evident is that Argentina has what the world actually needs,” Mr. Blinken said, alluding to minerals used in batteries.

‘Make Argentina Great Again’

Last week, the libertarian leader delivered a speech to the Conservative Political Action Conference (CPAC), where he exchanged a hug with former President Donald Trump.

In a widely shared video, the front-runner for the Republican presidential nomination told Mr. Milei to “Make Argentina Great Again,” and the Argentine president responded, “Long live freedom.”

Mr. Milei told the conservative audience that Argentina’s decline was a result of socialism fueled by “corrupt businessmen” and “corrupted media outlets.”

Argentine President Javier Milei speaks at CPAC at the Gaylord National Resort Hotel And Convention Center in National Harbor, Md., on Feb. 24, 2024. (Anna Moneymaker/Getty Images)
Argentine President Javier Milei speaks at CPAC at the Gaylord National Resort Hotel And Convention Center in National Harbor, Md., on Feb. 24, 2024. (Anna Moneymaker/Getty Images)

“The corrupt caste is made up of thieving politicians, who put their privileges above the welfare of Argentines. By corrupt businessmen, who do business with corrupt politicians. By corrupt media outlets, who are very angry with us because we eliminated their state advertising,” he said.

“Also trade unionists who take care of their business, against the people. And professionals who live off the religion of the state. Therefore, they will become aware of the great fight we are putting up, but we are not going to give up on making Argentina great again.”

Argentina’s Finances

Mr. Milei has been following through on his agenda after being sworn into office more than two months ago.

The government of Argentina announced that it achieved a monthly budget surplus of $589 million for the first time in nearly 12 months, which includes payments on interest accrued on the public debt.

This was achieved by applying what Mr. Milei has called “shock therapy,” such as laying off thousands of government workers, privatizing state-owned companies, and halving the number of ministries.

Meanwhile, the Milei administration is reportedly negotiating a new aid package with the International Monetary Fund (IMF).

Bloomberg reported on Feb. 29 that the president is working to accelerate a fresh injection of cash to fasten the country’s capital controls abolition.

In exchange for the program, the IMF is urging Argentina to allow the peso to devalue faster and keep interest rates above inflation, which rose to 250 percent last month.

The IMF called Argentina’s stabilization efforts “bold” and “far more ambitious” than measures taken by Mr. Milei’s predecessors.

“The authorities’ strong ownership and electoral mandate to eliminate fiscal deficits and long-standing impediments to growth (many benefiting vested interests) mitigate implementation risks,” the IMF said in a Jan. 29 paper.

Following her visit to Buenos Aires on Feb. 22, IMF Deputy Managing Director Gita Gopinath vowed to work closely with the president and his Cabinet.

“Common messages were echoed in my discussions with academics, labor, civil society organizations, and private sector firms,“ Ms. Gopinath said in a statement. ”There was broad recognition that Argentina needs market-oriented reforms to reverse a long-term decline in living standards, but that these should be designed and sequenced to ensure sustained and inclusive growth. Importantly, all concurred that Argentina has tremendous human potential as well as unique opportunities in energy, mining, and technology.”

Buenos Aires is still facing a series of headwinds, something that Ms. Gopinath confirmed that she observed during her two-day visit.

It was recently reported that the poverty rate climbed to a 20-year high of 57.4 percent in January.

Andrew Moran has been writing about business, economics, and finance for more than a decade. He is the author of "The War on Cash."
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