President-elect Milei says could take two years to tame Argentina's inflation

Javier Milei celebrates with supporters after winning the presidential election runoff outside his party headquarters in Buenos Aires on 19 November, 2023

Argentina's president-elect Javier Milei said Monday that it could take between 18 and 24 months to bring Argentina's rampant inflation under control, as he outlined his plans to reform the economy.

Milei won a resounding victory in Sunday's presidential election, trouncing economy minister Sergio Massa by 12 points with a pledge to halt decades of unbridled state spending and "end the decline of Argentina."

The 53-year-old outsider, who has drawn comparisons with former US president Donald Trump and Brazil's Jair Bolsonaro for his abrasive style and controversial remarks, vowed to "very quickly put public accounts in order."

In a series of morning radio interviews to lay out his vision, he said he had a "clear plan" to tackle annual inflation that has hit 140 per cent and a poverty rate of 40 per cent.

During the campaign, Milei vowed to ditch the ailing peso for the US dollar and get rid of the central bank, which he accuses of fueling inflation by printing money to finance government overspending.

"The empirical evidence for the Argentine case says that if you cut monetary emission today, it takes between 18 and 24 months to destroy (inflation)," he said.

Milei is anti-abortion, suggesting a referendum to repeal access to the procedure, and does not believe humans are responsible for climate change.

But he has toned down his controversial rhetoric, and has focused on his plans to reform the state.

Milei said "everything that can be in the hands of the private sector is going to be in the hands of the private sector," including the state oil company YPF and state media.

He said he would push for the elimination of strict currency exchange controls -- with analysts saying the official rate of the peso to the dollar is an expensive fiction.

However, Milei said he would first seek to resolve the debt issued by the central bank.

"If the problem of the central bank is not resolved, the shadow of hyperinflation will follow us at all times," he warned.

Argentines can choose currency

Asked about his dollarization platform, Milei said the priority was "to close the central bank, then the currency will be the one that Argentines freely choose."

Milei will take office on 10 December, inheriting a country whose coffers are in the red, with $44 billion in debt with the International Monetary Fund looming over his incoming government.

IMF Managing Director Kristalina Georgieva congratulated Milei and said she looked forward to working with him "to develop and implement a strong plan to safeguard macroeconomic stability and strengthen inclusive growth for all Argentinians."

Monday is a public holiday, meaning the impact of Milei's win on the volatile peso has been delayed.

Argentina has in recent years strictly controlled the exchange rate of the peso and access to dollars, leading to a thriving black market for greenbacks.

This so-called "blue dollar" exchanges is almost three times the value of the official rate, and analysts warn the peso is ripe for a sharp devaluation.

Asked whether he would scrap restrictions on the purchase of foreign currency that have been in place since 2019, Milei said "it is not an option to maintain the trap that hinders the economy."

Reactions poured in for the new leader of Latin America's third-largest economy, including congratulations from Brazil and China -- which he had previously vowed to cut ties with, saying "we don't make deals with communists."

Milei toned down much of his more controversial rhetoric after winning the backing of the center-right opposition, and it remains to be seen which of his policies will materialize.

Following Milei's victory, Brazil's president Luiz Inacio Lula da Silva wished "good luck and success" to the new Argentine government.

But embattled Venezuelan president Nicolas Maduro blasted the president-elect, claiming Milei's win is a victory for the "neonazi extreme right" and plays into the hands of "US imperialism."

"We respect the decision of the Argentine people," said Maduro, whose 2018 re-election was not recognised by several countries including the United States, "and we simply call for reflection on the emergence of the far-right which seeks to impose a return to the colonization of Latin America."

China said Monday it would continue working with Argentina, congratulating the president-elect on his victory.

"China has always attached great importance to the development of China-Argentina relations from a strategic and long-term perspective," foreign ministry spokeswoman Mao Ning said at a regular briefing.