Argentine President Javier Milei has announced plans to dismiss 70,000 government employees in the coming months, highlighting another step to implement the libertarian’s vision of a small-state society.
“We are convinced of carrying out a fiscal adjustment, which has a lot of chainsaw and blender,” Mr. Milei said in an hour-long speech at a March 26 event held in Buenos Aries by the International Economic Forum of the Americas, referring to his plan to rapidly bring the South American country’s hovering 250 percent inflation down to single-digit levels.
“We completely eliminated public works, of which I am proud, and something that all good people should oppose. We eliminated discretionary transfers to the provinces. We fired 50,000 public employees. Contracts were canceled and 70,000 more are going to be cut.”
Mr. Milei, a self-proclaimed anarcho-capitalist, also touted the termination of more than 200,000 social welfare programs, which he said were delivered in an “irregular” manner. “At no time was social policy neglected,” he assured the audience, pointing to the increases in allocations to help citizens cover food and schooling expenses.
In a statement to the Argentine newspaper La Nación, Casa Rosada (the Argentine government house) explained that the 70,000 figure represents the universe of government employee contracts currently under review. The Milei administration further noted that the cut will be conducted in stages, with about 20 percent of those employees set to be laid off by the end of this month.
Mr. Milei’s presidency started with a promise to stop Argentina’s decades-long spiral into economic oblivion. In December 2023, when he was sworn into office, more than 26 million people, or 49 percent of the country’s population, were living in poverty.
Despite its rich economic resources, Argentina has defaulted on its sovereign debt nine times. The country often found itself grappling with mounting foreign debt, including tens of billions of dollars of loans from the International Monetary Fund (IMF) and more recently from China, its second-largest trade partner.
Prior to the rise of Mr. Milei, Argentina’s politics was dominated by Peronism, a populist movement founded in the 1940s and characterized by left-wing, collective public policies such as nationalizing the central bank and large corporations, expanding social welfare benefits, and forging alliances with labor unions.
In his March 26 speech, Mr. Milei reiterated his vow for a departure from the Peronist status quo, which he described as a “true catastrophe.”
“We Argentines lost 80 percent of our income in this populist adventure that took place in recent years,” he said. “Five million Argentines do not have enough to eat. And we also had a twin deficit of 17 points of GDP.”
Mr. Milei also dismissed criticisms that the chainsaw-style approach is unsustainable, arguing that his administration must take quick actions to do what is necessary in order to achieve a “V-shaped” economic recovery. He also called out the politicians who “do not want to give up their jobs and seek to maintain their privileges” for obstructing his reform.
“We did what we had to do, and that implies a dose of courage that others do not have, to the misfortune of the helicopter club and all those who wish us to do badly, especially those who complain that we cut their jobs,” he said.
Since his inauguration last year, the Austrian School economist-turned-president has implemented measures to counteract Argentina’s past of state interventionism, including a substantial devaluation of the peso and a drastic reduction of government spending.
In a Jan. 17 speech at the World Economic Forum, Mr. Milei argued that the key to combating poverty across the globe is to embrace, not reject, the ideals of free market capitalism.
“Far from being the cause of our problems, free enterprise capitalism, as an economic system, is the only tool we have to end hunger, poverty, and indigence,” he said. “The empirical evidence is unquestionable.”
Kristalina Georgieva, head of the IMF, also spoke in favor of the Milei administration’s efforts.
“The Argentine economy is in such bad shape that it has to be shaken up. President Milei and his team are doing exactly that,” she said during an interview with CNN at the World Economic Forum in January. Argentina is currently the IMF’s biggest debtor, with an outstanding debt of $46 billion.
