It can be said that Argentinians now have a window of only six months for Milé. If within this six-month period, the lives of Argentinians become more painful due to Milé's new policies, or in other words, if their pockets remain empty before the dawn arrives, people are likely to lose patience and will not give Milé too many chances.
This means that after Milé takes office, Argentina will either hit the jackpot or be out of the game!
According to reports from Latin American media, Argentina now has 11 provinces that have declared an economic emergency and announced plans to control and reduce public spending. The reason is that the country has encountered an economic emergency; if expenditures are not cut, it may not be able to pay the salaries for December.
So, what economic emergency has Argentina encountered?
It's the two fires that Milé has ignited after taking office: First, the Argentine peso was devalued by 54% overnight, and it is planned to devalue the peso by another 2% each month until everyone abandons the use of the peso in favor of the US dollar, in an attempt to reduce domestic inflation. Second, half of the government departments have been reduced, and government subsidies for energy and transportation have been cut to decrease the country's fiscal deficit!
Milé originally intended these two fires to control Argentina's high inflation and the government's financial burden, but everything has two sides. I believe Milé is now gambling, betting on whether the storm and sunshine will come sooner.
Because of the significant devaluation of the peso, although it can suppress the probability of people using the peso, the transition away from the peso is not an overnight task. Instead, it may further exacerbate domestic inflation in Argentina due to the increased prices of imported goods. Additionally, the country's external debt will further expand, so how will the maturing US debt be repaid?Secondly, reducing government departments and expenditures has saved the Argentine government a considerable amount of money, but this also implies that people will spend more on electricity and transportation, making life tougher for everyone in the days to come. All of this introduces uncertainty to Miley's economic reforms.
Indeed, Miley has begun to seek assistance from China, requesting an expansion of the scale of local currency swaps and an extension of the swap period. To put it bluntly, Miley wants to use the renminbi to navigate Argentina's current economic predicament, and then take a gamble on the United States offering a helping hand, hoping to welcome bright sunshine before the storm hits Argentina.
However, senior American researcher Boli has indicated that Argentina's annual inflation rate could reach 300%, and government spending cuts will also derail Argentina's economic growth. The Institute of International Finance also forecasts that Argentina's economy will contract by 1.3% in 2024.
Thus, Miley's bold economic reforms can only be described as a precarious balancing act, like trying to keep eggs steady on a bench.
