LONDON: Argentina’s financial markets made a groggy start to the Javier Milei era on Monday as they waited impatiently for the new president to launch into his promised economic shock therapy with a huge devaluation of the peso.

The radical economist took office on Sunday with a warning in his inaugural speech that he had no alternative to a sharp, painful fiscal shock to fix the country’s “titanic” challenges. Milei has promised deep cuts to public spending but his task looks daunting with hyperinflation and recession looming and the government’s reserves thoroughly depleted.

The 53-year-old’s speech on Sunday had been light on detail, but he reiterated there would be a fiscal adjustment equivalent to 5pc of GDP through cuts that would fall on “the state and not the private sector”.

Investors are now waiting for the plan to be fleshed out and to see how quickly he moves. That seemed to irk the stock markets.

Argentina’s international dollar-denominated bonds, which have surged some 25pc since Milei won the presidency last month, ticked lower too but focus was largely on the peso and when and how large its widely-expected devaluation will be.

Published in Dawn, December 12th, 2023