MIAMI — The World Bank on Wednesday endorsed the measures implemented by the government of Argentine President Javier Milei to reduce the fiscal deficit and get the economy back on track and said that although they are painful, they are necessary for the South American nation to emerge from stagnation.
“The Argentine government is moving in the right direction,” said William Maloney, WB chief economist for Latin America and the Caribbean. By putting the fiscal accounts in order, inflation will decrease, which “is essential,” he indicated in a virtual press conference in which the organization revealed the regional economic prospects for this year and the coming years.
The WB’s support follows that given by the International Monetary Fund (IMF) to Milei’s government, after praising it for “bold measures” to restore economic stability and address problems that slow growth and investment.
Argentina, one of the three most important economies in Latin America along with Brazil and Mexico, is going through a deep recession of more than two years. In 2023 its Gross Domestic Product contracted 1.6% and in 2024 it will decline 2.8%, according to WB forecasts. Together with Haiti, they are the only two countries with a recession in all of America.
Upon assuming power in December 2023, Milei implemented a complete turnaround in Argentine economic policy, with an orthodox plan that included a devaluation of the peso by more than 50%, deregulation of prices that were controlled and elimination of subsidies to sectors such as public transport and electricity and layoffs in the state sector.
Milei, a renowned economist, asked for understanding about the drastic and urgent measures to correct the distortions existing during several decades of leftism in Argentina, which led the country to bankruptcy and several severe economic crises, such as the one it was in before Milei arrived. to the Pink House.
February inflation fell 13.2% monthly, but still equals 276.2% annually. This is how Argentina remained after Peronism and Kirschnerism, and as Milei has reiterated, the effect of the measures will take time to reverse more than 50 years of economic and social failure, where poverty reached more than 60%.
In January, Javier Milei’s government reduced state spending by 30% and in February by 36%.
Maloney said that Argentina is a country with a lot of wealth, potential and human capital, but it has to implement measures to progress.
The challenge, he maintained, is to achieve a balance to also protect the most vulnerable sectors. That is why the World Bank is working with the Milei government to ensure that food assistance and employment programs are more effective and protect low-income families at a time when they are also trying to balance fiscal accounts, explained the president of the World Bank. World Bank.
“There is a very big agenda that Argentina has to face to take advantage of its potential,” said the chief economist. “Looking ahead we have to achieve these reforms. “It is the only way forward.”
Source: with information from AP and AFP.
