Argentine austerity anger mounts, but govt says its working

BUENOS AIRES

Argentine trains ground to a halt and hospitals were left running on fumes this week as austerity measures sparked mass walkouts - even as the country boasted its first budget surplus in 12 years.

More than two months after libertarian President Javier Milei took office vowing to slash spending, his massive cuts are taking a toll and - as he warned - for now worsening people's economic situation.

Annual inflation has hit 254 percent and since Milei ripped away hefty transport and fuel subsidies the price of bus tickets has more than tripled.

The cost of medicine has soared over 300 percent year-on-year.

While the government decreed a 30 percent salary increase by March, this is far less than the 85 percent demanded by labor unions - and the walk-outs are mounting.

On Feb. 21, train drivers downed tools, and on Feb. 22 healthcare workers across the public and private sector went on strike, with only hospital emergency rooms expected to function.

Teachers have called a strike for the start of school next week, and the country's main CGT union is debating another general nationwide walkout.

"There is no money," said Milei when he took office.

The 53-year-old self-described "anarcho-capitalist" devalued the peso by over 50 percent, cut tens of thousands of public jobs and halved the size of the government.

The government, though, is projecting optimism - and touting achievements.

"When we hit rock bottom, we will bounce back," Milei said.

In January, Argentina reported its first monthly budget surplus in 12 years.

Economist Salvador Vitelli, from the Romano Group, said the "unusual fiscal result" was explained by a 39.4 percent drop in spending due to cuts in pensions, subsidies, and salaries.

Despite the eye-watering interannual inflation, the government says it is coming under control. Monthly inflation dropped to 20 percent in January after hitting 25 percent in December.

Economy Minister Luis Caputo said he hopes for a figure closer to 10 percent in February, and single digits by the second half of the year.

Nevertheless, economist Juan Manuel Telechea, of the German Abdala Foundation thinktank, said Milei's extreme belt-tightening measures are "exceptionally risky, given it can deepen the recession and the drop in the population's purchasing power."

This "will test the social tolerance of a society that has already been hit hard," he warned.

Milei swept to power on a wave of disgust with previous governments led by traditional parties who failed repeatedly to halt the country's economic woes.

Recent opinion polls show Milei's support is starting to wane, with slightly less than 50 percent having a positive opinion of the president.

However, for the first time in a long time, a majority of those surveyed said they expect to see the economic situation improve over the next two years.