World

The man who grew Argentina’s stock market by 100% in a year

Since Javier Milei was appointed president of Argentina, the country’s stock market has grown by 122%, translating to an annualised growth rate of 99.9%.

Milei is an economist and politician who has taught university courses and written on various aspects of economics and politics.

He has worked as chief economist in leading organisations and acted as an economic adviser to the government.

He is a libertarian economist known for his radical reforms to reduce state intervention and promote free-market principles.

He believes in privatisation, deregulation, downsizing government, reducing tariffs and taxes, and dollarising the economy.

Since Milei took office as Argentinian president in December 2023, he has actively reduced the size of the government and combatted inflation.

Before Milei became president, the economy had a government deficit of 15% of GDP. Simply put, the government spent much more money than it earned.

The deficit was financed by taking on more debt and printing more money, which, in turn, caused runaway inflation. When Milei took office, annual inflation was 211%.

He cut 10 of the government’s 18 ministries and created a deregulation ministry that removes one to five unnecessary regulations per day.

He laid off 50,000 unnecessary government employees and established a plan not to renew any government contracts unless they were essential.

He cut all subsidies paid to provincial governments and utilities to restore utility rates to market-related levels.

He removed government middlemen called “poverty managers” who distributed poverty aid and caused only a portion of the aid to reach the intended parties.

The cuts enabled Argentina to move government debt from the central bank back to the treasury’s budget, reviving Argentina’s debt market.

These adjustments helped Argentina to cut wasteful and unnecessary spending. After only one month, Argentina turned its 15% of GDP deficit into a balanced budget.

Argentina could service its mounting debt without taking on more debt or printing more money and could even repay the capital portion of its debt.

Milei described his reforms as “shock therapy” and warned that things would get worse before they get better.

Inflation increased during the first few months of his presidency. However, it has started slowing since March 2024.

In the last reported month, Argentina’s month-on-month (MoM) inflation rate stood at 2.4%, compared to 12.8% when Milei became president.

Milei’s actions of reducing the size of government and removing red tape through deregulation have instilled confidence within the private sector and the economy.

In addition, Milei stated that he would significantly simplify Argentina’s tax system by cutting taxes and implementing only six tax rates.

Milei has also started cutting import tariffs to curb inflation and make it easier and more affordable for the private sector to obtain raw materials and other goods.

Since he took office, the Argentinian stock market has grown by 122%, translating to an annualised growth rate of 99.9%.

This is significantly more than the 36% growth Argentina experienced in the 12 years before his appointment, which translates to a mere 2.5% annualised growth rate.

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