President-elect Javier Milei emerges victorious in a closely contested election, but a daunting Argentina economic crisis lies ahead.

The nation grapples with a staggering 143% inflation rate, significant deficits in foreign currency reserves, and a growing reluctance among savers to stick with the peso, Reuters reports.

An impending recession adds to the complexity of the situation, with four out of 10 Argentines living in poverty and the likelihood of a sharp peso devaluation.

Milei, advocating for bold economic measures such as closing the central bank and adopting dollarization, secured a 56% majority in the Sunday runoff against rival Sergio Massa, who garnered 44%.

As Milei prepares to assume office on December 10, the enormity of the task at hand becomes apparent.

The risk of a tenth sovereign debt default looms large, accompanied by the potential for increased poverty and social unrest if economic reforms fall short.

Miguel Kiguel, a former undersecretary of finance at the Economy Ministry in the 1990s, succinctly describes the situation as "an economy in intensive care."

READ NEXT: Javier Milei Wins Argentina Presidential Election 

Argentina Economic Crisis

Javier Milei's primary challenge lies in tackling Argentina's economic issues, a promise that resonated with voters drawn to the television economist's commitment to quash inflation and dismantle political class privileges, according to the Financial Times.

However, the true test will be the public's response to necessary austerity measures, such as reducing public sector jobs and scaling back on generous energy subsidies and welfare programs to achieve a balanced budget.

Despite Milei's ostensibly market-friendly plan to cut spending by 15% of the gross domestic product, investors remain jittery about governance risks, particularly given Argentina's history of robust labor movements and social protests.

Javier Milei understands that he has a singular opportunity to get the economy on track.

Failure could open the door for the powerful Peronist political machine, poised to capitalize swiftly on any misfortune.

Sergio Massa, the Peronist economy minister and defeated presidential candidate, is likely to make a swift exit following his election defeat, with reports circulating about his potential "leave of absence" rather than overseeing a potentially tumultuous transition on December 10.

From the outset, Milei set ambitious goals, pledging in his final campaign message to "end inflation forever."

However, the immediate challenge is more pragmatic: preventing a descent into hyperinflation. Massa's complex system of price controls and subsidies, crafted to curb inflation, expires with the election.

A significant devaluation appears inevitable, and the incumbent Peronists have little incentive to ensure stability before the new president's inauguration.

Even if Milei successfully navigates this challenge, numerous hurdles remain.

Argentina's $44 billion debt with the IMF requires renegotiation, and the 2020 agreement with private creditors seems unsustainable.

Massa leaves behind a substantial pile of domestic debt, much of it carrying triple-digit interest rates.

In his final campaign video, Milei urged voters not to be afraid, emphasizing the bold leap into the unknown that Argentines have chosen.

Nevertheless, there is a palpable sense of trepidation about what lies ahead.

Could Javier Milei Help Argentina?

According to Benjamin Gedan, the director of the Argentina Project at the Washington-based Wilson Center, if Javier Milei and his allies in the current opposition successfully trim spending reduce welfare and subsidies, all while safeguarding the most vulnerable, it could mark a positive turning point.

The key lies in striking a balance that benefits the economy without disproportionately impacting the disadvantaged, per Al Jazeera.

There are additional encouraging signs on the horizon. Following Argentina's worst drought in a century, resulting in a significant drop in agricultural exports and a $20 billion revenue shortfall over the past two years, the country anticipates a robust harvest in 2024.

Moreover, Javier Milei stands to gain from an estimated $10 billion in annual savings in energy imports.

This windfall is expected as a new gas pipeline increases production from the vast Vaca Muerta oil and gas reserve. Economist Elizabeth Bacigalupo from the Abeceb firm provides this optimistic estimate.

READ MORE: Mexico Photojournalist Found Dead 

This article is owned by Latin Post.

Written by: Bert Hoover

WATCH: Javier Milei: who is Argentina's new president? - From Guardian News