A little more than a week has passed since Javier Milei assumed the Presidency of the Republic and it seems like a century. The changes started with the most expected shock: a sincerity of the official dollar that brought its value to 800 pesos with the consequent and inevitable acceleration of inflation.
As it could not be otherwise, when it comes to sharply reducing the primary deficit, the government, in these first five days of management, introduced significant cuts in spending and simultaneously significant increases in public revenues. He cut the official agenda, eliminated discretionary and voluntary transfers to the provinces for new public works, changed to the Ministry of Economy the dialogue of the provincial governments on economic issues that had always been in the Ministry of the Interior, reduced ministries and secretariats, does not renew contracts, etc. On the revenue side, a series of increases were introduced in the withholding taxes on exports and imports.
In addition to these first measures, in the coming weeks, there will be the packages of State Reform laws that will be presented to Congress, as well as the legal processes for updating the tariff schedule.
So far there has been only one actor on the scene and that has been the National Government. However, at the end of the week, in anticipation of President Milei's call to the Governors, the Province of Buenos Aires threatened, through statements by the Governor's Chief of Staff, the possibility of reissuing Patacones due to the lack of resources.
The proposed proposal, which is in accordance with the law, clearly defines the possible courses of action of the Provinces in a Federal Country such as Argentina. The provinces can join the model of adjustment of public spending proposed by President Milei and which was and continues to be strongly supported by the people, or try to continue spending above their income by resorting to the issuance of bonds to finance themselves. The debate with the provinces has only just begun, and so far none has suggested that it intends to align itself with the new policy of fiscal austerity.
Governors have a tremendous political responsibility since the sum of their administrations almost triples the number of public jobs in the national public sector. What are you going to do in the face of the new government's decision to eliminate voluntary transfers and achieve fiscal balance by 2024? According to a study, the fiscal surplus that most of the provinces had until now would become a deficit with the implementation of the announced measures. The "game has just begun" and the political actors will have to start showing their cards.
On the other hand, and just as important as the problem of the provinces, the campaign of fear is not yet over and opposition forces from different spaces are already harassing the government. The social movements and the ultra-Kirchnerist sectors called for a massive mobilization in the City of Buenos Aires on December 20 to put pressure on the new government in the face of the threat of losing the "administration" of the gigantic mass of money that the social plans represent.
In this complex scenario faced by the newly assumed government, it would also be necessary to mention the "friendly fire" that ranges from first-rate economists who "rush to point out" everything that the government lacks to have a stabilization plan, as if sometime, one of them, on some occasion, had been part of a successful experience. Also from radicalism, voices that we have not heard for a long time are beginning to appear, making critical statements.
Society is hopeful about the change it voted for. Fiscal balance as the cornerstone of the government's entire program has enormous popular support. The people are going to fully support the government so that it stands up and does not give in to pressure.
The political support that the new government may obtain in the coming months will largely define the time that will be necessary for Argentina to begin to overcome the brutal crisis that it has been dragging on in recent decades.