Pros and cons of Argentinian President Javier Milei’s ‘shock therapy’

For more than a decade, Argentina’s economy has show little sign of growth amid a deep economic malaise, as the Latin American nation topped the world’s highest inflation rate last year.

Argentina’s meltdown that was quickly politicised by far-right president Javier Milei for electoral gains.

"I ask for patience and trust," said Milei during his first policy speech to parliament on Friday."It will be some time before we can perceive the fruit of the economic reorganization and the reforms we are implementing."

For those living in the Latin American nation, Milei’s “shock therapies” do not appear to be helping those in most need. The poverty rate is around 57 percent.

In Argentina’s mountainous hinterlands of Cordoba, where Milei closed his presidential campaign and gained over 70 percent of votes in the second round, families are feeling the pinch in supermarkets amid spiralling inflation and a loss of purchasing power.

With a baby clutched to her side, a mother scans the prices of diapers inside one store, before producing a wad of cash and counting it.

She then grabs the smallest and cheapest brand available, as another mother asks her if she has tried it before.

"I came for yoghurt and diapers, but I can only afford the diapers,” responds the first mother.

The second mother follows suit, picking up the cheapest diapers before heading to the checkout.

Similar scenes are unfurling across Argentina. Increasing prices mean many locals compromise on essential goods as the currency – the peso – continues to plummet.

The loss of buying power over the last five months in Argentina has been the largest decline for around the last two decades, drawing comparisons to the infamous 2001 crisis. That 14-month tumultuous period led to the resignations of four consecutive presidents – Fernando De La Rua, Alberto Camaño, Ramon Puerta and Alberto Rodríguez Saá – in just a few weeks.

This time around, there is no substantial buffering policy from the national government for the most affected population. Milei’s time in office has seen increased production and an abundant supply.

However, amid a range of revised economic measures, many say they are unable to afford the goods, leaving supermarket shelves brimming with stuff.

The soaring costs of everyday items ranging from dairy products to tuna and tomato purée see many return goods once they reach the checkout aisle, after being unable to pay.

Milei’s government began its term with a 50 percent devaluation of the Argentine peso against the US dollar, described as the most intense devaluation of the Argentine currency in the shortest period in history.

Inflation is 45 percent, resulting in a decline in consumption. Places like pharmacies are selling around half the quantity of medicines as people tighten their purse strings.

Milei also introduced a so-called “mega-presidential decree,” repealing more than 300 laws in social, labour, cultural, economic and other sectors.

Milei is removing price controls and loosening economic regulations involving the production and sales of goods and services that stretch as far as rental market controls, impacting the cost of living.

Mildei’s decree was followed by a so-called Bases and Standing Point for the Liberty of Argentinians, a mega-bill sent to Congress comprising more than 650 articles.

The overall aim is to enact a complete overhaul of the legislative branch and the executive branch, something the experts from the Association of Lawyers of the Province of Buenos Aires have criticised.

In an Open Letter, they call it “typical of a state of exception, which implies the weakening of the republican and democratic principles of the Constitution.”

The arts and culture sector has been swiftly targeted, marking a shift in policy amid Milei’s rhetoric and emphasis on productivity.

Less than a month into Milei’s tenure, his moves led to a nationwide protest by artists, actors, musicians and students.

Others who earlier considered themselves comfortably well-off have also hit the streets, angered by Milei’s policies and the bleak economic situation.

Argentines like Mariela, a single parent of two who works as a secretary in the Federal Tribunals of Cordoba, brings in extra income as a part-time artist. She has seen her purchasing power take a nosedive.

Until recently, she considered herself a part of Argentina’s middle class, she says. However, those like her say they are barely above the poverty line now.

Mariela insists it's not just her personal situation but part of a wider trend across Argentine society.

She says those like her voted for the opposition figure, Sergio Massa. She now sees it as a moment for Argentina’s opposition to self-reflect.

“What did we do to create a monster like Milei? But we can't stand by idly while everything we've built in 40 years of struggle and democracy is demolished in an instant. No matter how many votes he got in the presidential election, he can't just come and sweep everything away. It's the whole people who need to react," Mariela tells TRT World.

The protest has seen a wide representation from Argentina’s youth like Maxi and Martin, two young men in their 20s who fear what austerity will mean for many in the country.

Both work as call centre agents and play a prominent role in the left-leaning activist scene. They say most of their co-workers bought into the rhetoric that Milei would lower taxes while the country’s political elite would bear the economic brunt.

However, they say their salaries do not suffice and they can’t fully support a family.

Martin, the elder of the two, says many Argentines will not tolerate perceived injustice, insisting things are going in the “wrong” direction.

“If Milei continues like this, the same people who voted for him, my co-workers, they're the ones who will bring him down," he tells TRT World.

The cultural protest was followed by a nationwide general strike where over an estimated million people demonstrated in Argentina's main cities.

Diego Jimenez, a biologist and researcher for CONICET, Argentina’s National Council for Scientific and Technical Research, was among the protesters in the general strike in Cordoba, where about 50,000 people demonstrated.

He sees Argentina as a “political experiment” led by Milei amid a push to restrict the right to protest. He describes the current government policies as “repressive” and its rhetoric as “shouting and violence".

He says the proposed salary revisions “are already below the poverty line”.

CONICET is Argentina’s prestigious scientific research institution, responsible for 280 centres throughout the country.

“There are layoffs of administrative staff. There are 1,600 cancelled research grants for researchers who had competed to enter and who now will have to seek opportunities abroad, abruptly halting their research without prior notice. We've never experienced a situation like this before," Jimenez tells TRT World.

The prompt protests against the Milei government's measures are unprecedented in Argentine history, according to local reports that point out there has never been a general strike in such little time.

Consequently, less than half of the bills sent to Congress were approved by the Lower House.

“This ends up being the most extensive and voluminous reform from a newly elected president since the return to democracy,” lawmaker and opposition leader Rodrigo De Loredo said regarding the bill concerning its debate in Congress.

However, the government decided to withdraw one specific bill while

Milei has insisted that his bid to maintain a fiscal surplus through cuts in spending was not negotiable.

The far-right leader said it would be carried out with or without the support of Congress.

In January, the government announced it reached a primary and financial surplus, something that had not been achieved since 2012.

Expenditures on social programmes fell by almost 60 percent from January 2023 in real terms. Wider measures included a reduction of 32.5 percent in retirements and 53.3 percent in distribution to the provinces, helping Milei’s government reach a fiscal surplus.

Those being directly affected by cuts to social welfare are the likes of retiree Alfredo and his 40-year-old son Nicolas who suffers from disability, in the small town of Huerta Grande in the highlands of Cordoba.

Alfredo is a 74-year-old who receives the minimum pension. In order to support Nicolas, he had to cut back on eating.

Their situation has become worse every week since December.

"Last year, we started eating one meal a day to make ends meet. We wake up late so we skip breakfast, have a snack of bread with butter in the afternoon, and then dinner. But last month, the money only lasted us for two weeks.” Alfredo tells TRT World.

The situation has pushed him to take drastic action in a bid to try to make ends meet.

He says they’ve been selling tools, scrap metals and anything of some value that they had in their house to survive, while also receiving help from family members.

Alfred says his income isn't nearly enough. He says they can lose the roof over their heads, even though they have tried to tighten their purse strings amid Milei’s wholesale cuts to achieve a fiscal surplus.

“We're already one month behind on rent. I don't know how we're going to pay for it. They'll have to evict us with a lawsuit if this continues. Where are we going to end up, in the streets?"