One way to cover expenses is to raise income. The dude running the gov is a libertarian. I don't think he sees running out of other peoples money as a problem. It might be the point. "Big gov".
I don't think you understand the severity of the cash crunch they were facing. How exactly could they raise government revenue fast? Tax rates were already high and compliance was low. Can't get blood from a stone.
Longer term they could maybe sell off some state assets but it takes time to bring in any cash that way.
The severity of the cash crunch has been seen time and time again with the difference being that loans were used to fund a functioning government instead of being used by rich people to buy cheap US dollars to fund their vacations in Europe.
What's your point? Regardless of what was done before there were no more loans available in the short term.
Seriously, what was the alternative? If you have no money and no one will lend you any money then the only remaining options are to run the printing presses (hyperinflation) or stop spending.
The alternative was to take the loans, keep the existing currency control mechanisms, and run a moderate amount of inflation and exchange rate to keep the economy competitive while the income from exports in mining and ag kept coming in.
What's been done instead? Open currency markets while intervining to keep the US dollar artificially cheap, losing productivity and competitiveness and thus losing taxable income while funding cheap imports for consumer goods.
No, you're really missing the point. There were no loans being offered at the time the budget cuts were made. There were no loans to take. Their credit line had been exhausted. They had run out of other peoples' money. How are you not getting this?
No, I get the point because I've spoken to several specialists on the matter. The budget cuts Milei performed were far higher than what even the most conservative IMF program proposed.
There was no technical reason to cut budget to that level. It pure ideological motivation.
>>> No, I get the point because I've spoken to several specialists on the matter. The budget cuts Milei performed were far higher than what even the most conservative IMF program proposed.
You clearly don't. There was 2100% annual hyperinflation on the day Milei assumed. "Specialists" said that cutting inflation to monthly single digits couldn't be done, period.
Milei did it in less than 6 months.
The current predicament is a political one, not an economic one.
He allowed Argentinians to finally experience the freedom of a floating exchange rate. Under normal circumstances, if the Argentinians decided they had enough of the peso and wanted to forcefully commit to the USD, they could do so at whatever rate was offered.
The political problem is that now there's an election this weekend, and he now has to explain why Argentinians (and investors) don't want pesos if the FX goes too high. He should not have put the govt in the position to defend a peso... that Argentinians themselves do not want.
After the election, there will be nothing to speculate against, the currency will find whatever equlibrium was needed, and the "specialists" will go back to their corner, where they hide for being wrong.
