Mauricio Macri, Argentina’s President made an announcement of the new austerity program on Monday from the presidential palace. “We believed with excessive optimism that we could go along fixing things bit by bit. But reality shows us that we have to move faster. The world has told us that we are living beyond our means,” – Mr. Macri commented. He underlined the importance to demonstrate to the international financial institutions that Argentina is able to conduct its economic policy responsibly.
Argentina has already taken some steps in order to restore the investor confidence when the central bank raised the benchmark interest rate to 60%. But as the country is extremely indebted, the authorities have to cut back on the fiscal spending before any debt servicing is even considered. This is exactly what the economy minister of Argentina, Nicolas Dujovne promised as well. Unfortunately, it also means cutting back on certain social programs that might not be popular among the public. Consequently, it should not come as a surprise that the speech given by President Macri announcing the austerity plan was so passionate, emphasizing the importance of collective action several times.