Argentina Sees First Budget Surplus Since 2008

President of Argentina Javier Milei before an inter-religious service at the Metropolitan Cathedral after the Presidential Inauguration Ceremony in Buenos Aires, Argentina, on Dec. 10, 2023. Marcos Brindicci/Getty Images

Newly elected Argentinian President Javier Milei announced the country’s first quarterly budget surplus in 16 years, with the anti-socialist politician hailing the achievement.

“Contrary to the forecasts made by most political leaders, professional economists, television, and pettifoggers, I would like to announce that the national public sector recorded a financial surplus of more than 275 billion pesos ($310 million). This is 0.2 percent of the GDP,” Mr. Milei said in a message on April 22, according to MercoPress.

This was the first quarter with a budget surplus since 2008, when his leftist rival, Cristina Kirchner, was in the first year of her presidency. Mr. Milei, who only entered office in December 2023, said the quarterly budget surplus “is plainly a world-class feat.”

Argentina registered an annual budget deficit in 113 of its past 123 years. After Mr. Milei came to power, the country posted a monthly surplus for three straight months between January and March.

Argentina has a poverty rate of 60 percent. The annual inflation rate is nearly 300 percent, year on year, and citizens have seen their purchasing power decline by a fifth.

It was amid these circumstances that Mr. Milei, a political outsider and an economist, entered the elections, promising to cut the budget deficit down to zero. He attributed Argentina’s economic woes to socialism and vowed to downsize the government along with its deeply rooted political establishment.

After coming to power, Mr. Milei instituted a series of austerity measures, including eliminating thousands of government jobs and reducing energy subsidies.

In his message, he said: “The situation we are going through is hard, we have already gone halfway. This time the effort will be worth it.”

Months ago, accomplishments such as a quarterly budget surplus “seemed impossible,” he said.

“We are making the impossible possible, with the majority of politics, unions, journalists, and economic actors against us. Inflation is plummeting and is every month lower than expected,” he said.

“The requirement is to guarantee a solid and stable economic order. So that Argentines can associate, trade freely, and carry out their life project. Free prices and clear signals to be able to plan and invest. That is the task of the state, to generate the basic conditions.”

Mr. Milei warned people who expect the administration’s public spending to eventually rise once again that it “will never happen” in his government. He insisted that “the way out is through the private sector and credit financed by savings.”

“Inflation is theft. Zero deficit is a commandment. This means that every peso will be returned through tax reductions—savings and tax reductions until we have a level of spending in line with that of a country that needs to grow,” he said.

Milei’s Impact

Argentinian markets have responded favorably to Mr. Milei’s policies. The peso has seen a recovery, the country’s risk index is now at the lowest level since 2020, and bonds have risen from last year’s lows.

However, manufacturing, economic activity, and consumption have declined. The economist’s policies, viewed as extreme by some, risk triggering civil tensions.

On April 23, hundreds of thousands of teachers, students, and workers hit the streets of Argentina to protest Mr. Milei’s proposed 70 percent budget cuts in public education.

Mr. Milei has several admirers in the United States, one being former President Donald Trump.

“Congratulations to Javier Milei on a great race for President of Argentina. The whole world was watching! I am very proud of you. You will turn your Country around and truly Make Argentina Great Again!” President Trump wrote in a Nov. 20, 2023, Truth Social post after the Argentinian’s election victory.

In February, U.S. Treasury Secretary Janet Yellen praised Mr. Milei for taking “some important steps toward restoring fiscal sustainability, adjusting the exchange rate, and combating inflation.”

The Argentinian president visited the United States in February, delivering a speech at the Conservative Political Action Conference, where he embraced President Trump. He blamed socialism driven by “corrupt businessmen” and “corrupted media outlets” for causing Argentina’s decline.

“The corrupt caste is made up of thieving politicians, who put their privileges above the welfare of Argentines. By corrupt businessmen who do business with corrupt politicians. By corrupt media outlets who are very angry with us because we eliminated their state advertising,” he said.

“Also, trade unionists who take care of their business, against the people. And professionals who live off the religion of the state. Therefore, they will become aware of the great fight we are putting up, but we are not going to give up on making Argentina great again.”

This month, Mr. Milei met with billionaire Elon Musk at Tesla’s plant in Austin, Texas, where the two men agreed “on the need to free markets and defend the ideas of freedom,” presidential spokesman Manuel Adorni said in an April 12 post on social media platform X.

“The President and the businessman spoke in Texas about the importance of eliminating bureaucratic obstacles that keep investors away. ... Both agreed on the importance of technological development for the progress of humanity and the need to establish clear and stable rules of the game in order to bring in companies that promote this development,” he said.