December 1, 2023 9:03 am

Javier Milei, the newly elected president of Argentina, is facing extreme challenges as he prepares to implement his proposed reform agenda. While Milei campaigned on strong measures that could address the country’s economic imbalances, these measures, if enacted as described, would cause an abrupt and deep economic adjustment. This could collapse domestic demand and threaten financial stability.

Moody’s Investors Service warned that political maneuvering and governance risks loom given the lack of party structure and the distribution of power in Congress after the elections. The credit agency also cautioned that a consensus may be necessary to carry out the proposed reforms.

JP Morgan also placed its magnifying glass on the risks of implementing Milei’s measures announced during the campaign. The US bank warned that President-elect Milei’s fiscal program would advocate for a strong adjustment of spending at both the central and federal levels with a primary fiscal balance consistent with an overall result of -1.7%. However, this decision could not be made for another year.

Barclays focused on governance and warned that social pressures will influence Milei’s ability to implement corrective policies. The British entity also stated that economic results will be key in determining whether or not Milei can maintain support from middle-income sectors.

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