Argentina's Milei warns of 'shock' austerity as he takes office

'There is no money,' President Javier Milei warns as he is sworn in

Argentina's new President Javier Milei gestures at the crowd from a balcony of the Casa Rosada government palace during his inauguration day in Buenos Aires. AFP

Argentina's Javier Milei was sworn in as President on Sunday, warning the country to brace for painful austerity measures as he seeks to cut spending and curb triple-digit inflation, all with empty coffers.

The libertarian economist, 53, broke with tradition to address thousands of supporters from the steps of Congress.

They waved flags and chanted “freedom” and “chainsaw”, referring to the tool he carried around while campaigning to symbolise spending cuts.

“There is no money,” said Mr Milei, vowing to put an end to “decades of decadence” by his overspending predecessors who he said left him “the worst inheritance” of any prior government.

“The bottom line is that there is no alternative to austerity and there is no alternative to shock treatment.

“We know that in the short term the situation will worsen. But then we will see the fruits of our efforts.”

Inflation has hit almost 140 per cent year on year and 40 per cent of the population lives in poverty.

Analysts have warned government reserves are deeply in the red, and the heavily indebted country has few credit options.

Mr Milei warned of spending cuts equal to five per cent of gross domestic product in Latin America's third-biggest economy.

After his speech he made his way – partly on foot, partly in a convertible – from the neoclassical Congress building to the Casa Rosada (Pink House) presidential palace, waving to supporters and flanked by his sister Karina, his closest confidante.

Mr Milei will later swear in a cabinet of nine ministers – a major slimdown from the current 18. He has said his first set of measures will be presented to Congress in days.

Earlier, Mr Milei spoke briefly to Ukraine's President Volodymyr Zelenskyy on the steps of Congress, and the two men shared a warm embrace.

Mr Zelenskyy said on social media he had also held talks with leaders of Ecuador, Paraguay and Uruguay as he sought to shore up support for war-torn Ukraine.

Also attending the ceremony was Hungary's nationalist Prime Minister Viktor Orban – the only EU leader who has maintained close ties to Russia.

“The Right is rising not only in Europe but all around the world,” Mr Orban wrote on social media, sharing a picture of a meeting with his “good friend,” Brazil's far-right ex-president Jair Bolsonaro, who is also in town for the ceremony.

Chile's leftist leader Gabriel Boric and the King of Spain Felipe VI were also attending, alongside representatives from other major nations.

The chainsaw

Mr Milei's inauguration caps a meteoric rise for the former television panellist who entered politics only two years ago.

His rants against the “thieving” establishment fired up voters and drew comparisons to leaders like Mr Bolsonaro and former US president Donald Trump.

With his deliberately dishevelled mop of hair and rock star persona, he would wave a powered-up chainsaw at political rallies, promising to slash public spending and a bloated cabinet.

He vowed to “dynamite” the central bank and replace the ailing peso with the US dollar.

Milei brandishes a chainsaw during a campaign rally in La Plata, Argentina, on September 12. AP

But for Argentines, the future is mired in uncertainty over what exactly their new president plans to do.

With few politicians from his party in Congress the hard reality of politics has set in, and Mr Milei has softened many of his stances and allied with politicians he previously insulted, incorporating some into his cabinet.

Talk of shutting the Central Bank, dollarisation and welfare cuts has dissipated.

“Milei 2.0 will still face an uphill climb, but he appears to have adopted a more pragmatic agenda and sought the advice of more experienced political figures,” said Benjamin Gedan, director of the Argentina Project at the Washington-based Wilson Centre.