The Argentine government last month saw its first monthly budget surplus in over a decade following the election of a new far-right leader – but at great cost.

President Javier Milei is continuing to push for substantial spending cuts, his Economy Ministry announced, as his first full month in office ends with an improved budget but many economic issues are still unchecked. Public sector finances ended January with $589million at the official exchange rate, the government said late Friday.

This includes payment of interest on the public debt. The Economy Ministry said in a statement to the Telam news agency it is “the first (monthly) financial surplus since August 2012, and the first surplus for a January since 2011.”

Far-right libertarian Milei has been negotiating with the International Monetary Fund over a $44billion loan. He has committed to achieving balance in public finances this year.

Milei still needs to contend with astronomical inflation rates in the South American country.

Argentina saw an inflation rate for January of 20.6 percent, with a 12-month rate of 254.2 percent following a 50 percent devaluation of the peso, a lifting of price controls as well as a strong rate increase.

He said last month that a January rate below 25 percent would be “reason to celebrate” and a sign of the success of his strategy.

Milei was elected on pledge to end the chronic inflation crises that have long plagued Argentina.

The country ended 2023 with a 211.4 percent inflation rate. Much of the country – an estimated 45 percent – remains in poverty.

Analysts say his fiscal adjustments have contributed to containing inflation, but recession has also contributed. Argentina’s GDP shrank by 2.8 percent this year.

Amilcar Collante, an economics professor at La Plata National University, told the Financial Times that Milei was relying on the recession to keep inflation down, as well as shorter-term strategies to reduce government spending.

He said: “It is not sustainable. At some point the government will need to launch a stabilisation plan that allows us to lower inflation while also growing the economy.”

Upward pressure on prices could be brought in as a result of Milei’s planned cuts to Argentina’s substantial energy and transport subsidies, with businesses warning of a surge in their energy bills.