Argentina's dollar-loving president Javier Milei warns the country to get ready for a painful economic shock

A supporter of Presidential candidate Javier Milei holds a replica of a hundred-dollar bill during a rally in September.

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• Argentina's newly-elected president Javier Milei made his inaugural speech Sunday.
• The dollar-loving libertarian warned his country to prepare for aggressive fiscal cuts.
• “There is no alternative to a shock adjustment… there is no money,” Milei said.

Argentina's newly-elected, dollar-loving president Javier Milei made his inaugural speech Sunday, warning his country to prepare for a painful fiscal shock as he bids to rein in sky-high inflation and steer the economy away from its sixth recession in 10 years.

"There is no alternative to a shock adjustment," Milei said, according to a translation by Reuters. 

"There is no money," he repeatedly told a crowd in Buenos Aires, a phrase he's previously used to justify his plans for aggressive economic reforms.

Milei, a political outsider who narrowly beat Sergio Massa in a run-off election to win the Argentinian presidency last month, has repeatedly pledged to make "chainsaw" cuts to try to bring soaring prices under control. Argentinian inflation hit 143% in October, according to data published last month.

"The outgoing government has left us on track towards hyperinflation," Milei said Sunday. "We are going to do everything we can to avoid such a catastrophe."

The La Libertad Avanza leader added that key policies will include making fiscal cuts equivalent to around 5% of Argentina's total Gross Domestic Product (GDP), with the measures likely to affect the state rather than the private sector.

Meanwhile, Milei didn't mention the US dollar in his speech Sunday, in the latest sign he may be backing away from one of his more radical election promises.

The libertarian economist had pledged to scrap the peso and replace it with the greenback in a "Hail Mary" move he believes would mend Argentina's broken economy by breaking a cycle of policymakers printing more pesos to help the country's pay its debts.

But he's subsequently shown signs of pragmatism, breaking with key economic advisor and dollarization advocate Emilio Ocampo and appointing moderate rivals to key roles within his Cabinet.

Read more: The US dollar is central to Argentina's plan to fix its broken economy. There's just one hitch.

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