Argentina’s President Javier Milei Unveils Austerity-Focused 2025 Budget Amid Political Showdown
Argentine President Javier Milei presents a 2025 budget centered on eliminating the fiscal deficit, sparking political clashes with opposition lawmakers over spending increases.
BollywoodFever: Argentine President Javier Milei presented his 2025 budget to Congress late Sunday, marking a pivotal moment in his push to eliminate the country’s fiscal deficit. The budget reflects Milei’s commitment to tight fiscal policy, a cornerstone of his libertarian agenda, and signals growing tensions with lawmakers who oppose his austerity measures.
In a rare move, Milei personally delivered the budget to Congress rather than delegating the task to his economy minister. He criticized Argentina’s history of poor economic management and made it clear he would veto any budget changes that compromise his strict fiscal goals.
This comes after a week of heated debates in the legislature, where Milei’s administration, which holds less than 15% of the seats, battled opposition attempts to increase spending on wages and pensions. These proposals, backed by opposition parties, aim to help struggling Argentines cope with rising inflation but threaten Milei’s IMF-supported “zero deficit” budget.
“The cornerstone of this budget is the first truth of macroeconomics: zero deficit,” Milei said, addressing an audience that notably lacked members of the opposition Peronist bloc, Unión por la Patria, who boycotted his speech. “Managing means cleaning up the balance sheet, deactivating the debt bomb that we inherited.”
Despite cheers from his supporters, Milei faces an uphill battle in Congress, where lawmakers control the final approval of the budget. Opposition leaders are pushing for concessions, but Milei has vowed to continue his austerity efforts, regardless of political resistance.
“The budget is a declaration of principles,” said economist Agustín Almada. “Even without compromise from the opposition, Milei will pursue fiscal contraction.”
Milei has made dramatic cuts to public spending since taking office, slashing subsidies, freezing wages, and trimming financial transfers to provinces. These moves have helped him achieve a fiscal surplus of 0.4% of GDP, something Argentina hasn’t seen in nearly 20 years. However, the austerity has deepened the economic pain for many, with poverty levels rising from 44% in December to nearly 60%, according to the Catholic University.
The battle over pensions came to a head last week when Milei vetoed a bill that would have increased social security spending. Although the opposition passed the measure in both houses of Congress, they failed to muster the two-thirds majority needed to override the president’s veto. The decision sparked protests from retirees in Buenos Aires, who faced off with riot police after losing nearly half their purchasing power to inflation.
Milei remains steadfast in his approach, arguing that tough reforms are necessary to restore Argentina’s market confidence. While annual inflation remains high at 237%, Milei has garnered support by bringing down monthly inflation, which peaked at 26% when he took office but has since dropped to 4%. The Finance Ministry projects that his budget plan will reduce inflation to 18% by the end of 2025 and generate 5% economic growth.
Still, Milei’s ability to push through his fiscal policies hinges on Congress, which has dealt him several blows recently. Last week, the lower house passed a bill increasing spending on public universities, a move Milei has promised to veto. Lawmakers also blocked his proposal to boost spending on intelligence services by $100 million, even as he plans to increase defense spending from 0.5% to 2.1% of GDP.
In his Sunday address, Milei took a confrontational stance, referring to lawmakers as “miserable rats who bet against the country,” signaling that political compromise may be in short supply.
“The half-empty chamber during the president’s speech is a sign that passing this budget won’t be easy,” said Marcelo J. García, Director for the Americas at geopolitical consultancy Horizon Engage. “Milei seems to be choosing confrontation over compromise once again.”
As Argentina continues to grapple with economic hardship, the path forward will likely be defined by ongoing political clashes between Milei’s administration and an opposition determined to counterbalance his austerity measures.
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