“The worst is over,” Milei said in a televised speech, unveiling the draft 2026 budget eight days after his party was trounced in provincial elections in Buenos Aires.
“The effort all Argentines are making is worth it,” Milei assured, while adding, “We understand that many have not yet felt it in their material reality.”
Appealing for more time for his libertarian reforms to take effect, the firebrand president said, “Rome wasn’t built in a day.”
While announcing relief for some of those worst affected by his deep spending cuts, he insisted that balancing the budget – his paramount goal since taking power in December 2023 – remained “non-negotiable”.
Failure to balance the nation’s books, he said, would lead South America’s second-biggest economy “back into the pit of uncontrolled inflation and the destruction of all hopes for the country”.
He did not issue a growth or inflation forecast for next year.
The 54-year-old self-styled “anarcho-capitalist” is facing considerable political and economic headwinds as he gears up for crucial midterm elections next month.
His party suffered a stinging defeat at the hands of the centre-left Peronist movement in elections to the legislature of Buenos Aires province that were seen as a litmus test of Milei’s popularity.
He goes into the midterms under a corruption cloud, following allegations that his sister and right-hand woman, Karina Milei, received a cut on state medicine contracts for the disabled.
Conciliatory tone
In a sign of the anger among many Argentines over his policies, Milei and his sister were pelted with stones on the campaign trail outside Buenos Aires in late August, with skirmishes breaking out among supporters and opponents.
The president’s cuts to spending on the elderly and disabled particularly have also alienated many Argentines, who staged regular demonstrations against Milei.
An unusually conciliatory-sounding Milei said he would increase pension spending by 5%, healthcare by 17%, education by 8% and disability pensions by 5% above inflation.
A former TV pundit, Milei came to power promising “shock therapy” for Argentina’s long-ailing economy, revving a chainsaw as a symbol of his plan to slash state spending.
He cut 53,000 public sector jobs, froze public works, cut spending on health, education and pensions, and led a major deregulation drive.
His reforms produced spectacular results on the inflation front – annual inflation fell from 211% at the end of 2023 to 33.6% currently – but caused a sharp downturn in growth and consumption.
Economists are now also warning that a heavily overvalued peso is damaging Argentina’s competitiveness.