MercoPress. South Atlantic News Agency

Milei foresees stagflation for the coming months

“Inflation is going to remain high because it is the result of the mess made by this government,” Milei said upon returning from the US

Argentina's Legislative Assembly (Lower and Upper House together) Wednesday proclaimed Javier Milei's victory with 55.65% (14,554,560) of the votes in the Nov. 19 runoff against Economy Minister Sergio Massa. Chairing the meeting, Vice President Cristina Fernández de Kirchner (CFK) also confirmed Victoria Villarruel would be her successor.

Milei thus became the president-elect with the highest percentage of votes since the return to democratic rule in Argentina in 1983. He will be sworn in on Dec. 10.

When CFK made the announcement, Lawmakers Milei and Villarruel stood up from their seats amidst the applause of their supporters.

Also Wednesday, Milei confirmed that Luis “Toto” Caputo will be the next Economy Minister and said his entire Cabinet had “already been defined”, but the names would be disclosed “in due time.”

Regarding his recent trip to the United States, Milei said it was very positive and that he received “extremely favorable answers to his proposals.”

“It has been a very positive trip. Yesterday's meeting was extraordinary, very important because of the role played by Jack Sullivan, who is Joe Biden's most influential advisor. We presented the characteristics of the challenges ahead and the nature of the economic program we are going to face. We also made a presentation on our international alignment. In both aspects we received an extremely favorable response”, he said.

“We restated our historic position of being aligned with the United States, Israel, and the West. We showed a clear and forceful position in what has to do with the conflict between Israel and the terrorist group Hamas and our position in the case of the conflict between Ukraine and Russia. Also our position regarding the BRICS,” he added in a radio interview.

“We are making strong progress. The meeting with the Treasury and with the Fund were led by the Cabinet Chief Nicolás Posse, and by Luis Caputo. I have the feedback from the meeting with the Treasury, the results were excellent. They perfectly understand Argentina's problems, they are very familiar with what the Leliqs have to do with. In this sense, the Minister of Economy, Luis Caputo, was able to discuss these issues in depth. There was an excellent reception and they understand perfectly the challenge we are facing. This was very good,” he went on.

Milei also said Caputo's appointment was a measure to avoid falling into hyperinflation. ”To avoid hyperinflation, it is key to dismantle the ball of Leliqs (Liquidity Bills, debt of the Central Bank with the banking system, for which it currently pays an effective interest rate of 253% per annum), it also allows opening the cepo (exchange rate controls),“ Milei explained. For this, ”I need someone who has an expert financial wrist; there is no greater financial expert in Argentina than Luis Caputo“.

”We make a fierce defense of the ideas of freedom, of liberal democracy, of not aligning ourselves either with autocrats or with those who do not respect freedom or democracy, neither with communists. That is a very strong starting point. Moreover, given the level of obscurantism that Argentine relations have had in the last 20 years, except the four years of President Mauricio Macri, this was very well received by the White House“, he stressed.

Milei also confirmed his government's Ambassadors to Washington will be Gerardo Werthein and to Brasilia Daniel Scioli will stay on the post because he ”has done a very good job.“

Regarding Argentina's future, Milei said that there will be ”stagflation” (high inflation and a fall in economic activity) with complicated months ahead because of the fiscal reorganization's negative impact. He also pledged to assist those affected by the new measures.

“Inflation is going to remain high because it is the result of the mess made by this government. We are creating all the mechanisms to stop the issuance of money so that in a period of 18 to 24 months we can put an end to inflation. That is the empirical evidence of the Argentine case. Convertibility, which worked under that same rule, took 20 months,” he also noted.