Argentinian President Javier Milei warns economic shock ...

Argentina libertarian economist Javier Milei has taken office, warning in his maiden speech that he has no alternative but to implement a sharp, painful fiscal shock to fix the country's worst economic crisis in decades that includes inflation heading towards 200 per cent. 

Key points:Javier Milei says he will make significant public sector spending cuts to stabilise the economyVoters hope Mr Milei's economic plan will end decades of boom-bust cyclesHe is expected to reveal more details later this week

"There is no alternative to a shock adjustment," he said on the steps of congress after taking the presidential baton and sash, with crowds of supporters cheering despite Mr Milei saying the economy would worsen in the short term.

"There is no money."

Mr Milei, 53 is a former TV pundit who shot to fame with expletive-ridden tirades against rivals, China and the pope. 

He is taking over from Peronist leader Alberto Fernandez, whose government was dogged by failures to rein in soaring prices. 

Supporters gathered near the National Congress ahead of Javier Milei's swearing in. (Reuters: Martin Cossarini)

"The outgoing government has left us on track towards hyperinflation," Mr Milei said. 

"We are going to do everything we can to avoid such a catastrophe."

While the speech was light on details, he said key steps would include a fiscal adjustment equivalent to 5 per cent of the country's GDP through cuts that he said would fall on "the state and not the private sector".

The wild-haired outsider marks a major gamble for Argentina: His shock therapy economic plan of sharp spending cuts has gone down well with investors and could stabilise the embattled economy, but it risks pushing more people into hardship, with more than two-fifths of the population already in poverty. 

However, voters — who drove Mr Milei to victory in a November run-off against a ruling Peronist coalition candidate — have said they are willing to roll the dice on his sometimes radical ideas that include shutting the central bank and dollarising. 

"He is the last hope we have left," said 72-year-old doctor Marcelo Altamira, who slammed "useless and inept" governments for years of boom-bust economic crises.

The outgoing Peronist government, Mr Altamira said, "had destroyed the country". 

Boom and bust

The challenges are huge. Argentina's net foreign currency reserves are estimated at $US10 billion in the red, annual inflation is 143 per cent and rising, and a recession is around the corner and capital controls skew the exchange rate. 

Argentina has gone through boom-bust cycles for decades with money printing to fund regular deficits stoking inflation and weakening the peso. 

That has worsened in recent years as reserves have dwindled with a major drought earlier this year, hitting main cash crops soy and corn. 

If not tamed, inflation could reach 15,000 per cent annually, Mr Milei warned in his speech, pledging to "fight tooth and nail" to eradicate it. 

Mr Milei also warned about a $US100 billion ($152 billion) debt "bomb". 

Argentina needs to revamp a creaking $US44 billion loan program with the International Monetary Fund (IMF), while Mr Milei needs to navigate ties with important trade partners China and Brazil, which he criticised during the campaign. 

'Change was necessary'

To fix the economic mess, Mr Milei has chosen mainstream conservative Luis Caputo to helm the economy ministry, with a close Caputo ally, Santiago Bausili, as the central bank chief. 

Mr Milei is expected to lay out a more detailed economic plan on Tuesday or Wednesday, sources from his team have told Reuters. 

The ceremony's guests included Ukrainian President Volodymyr Zelenskyy, Hungarian Prime Minister Viktor Orban and a US delegation. 

President Milei's swearing-in ceremony was attended by world leaders, including Ukrainian President Volodymyr Zelenskyy.(Reuters: Agustin Marcarian)

Right-wing former Brazilian leader Jair Bolsonaro also attended, as well as Uruguay's conservative leader Luis Lacalle Pou. 

Chile's leftist President Gabriel Boric was also present but left-wing leaders Luiz Inácio Lula da Silva of Brazil and Mexican Andrés Manuel López Obrador were some of the major absences. 

In a sign of the challenges ahead, state energy firm YPF hiked petrol pump prices this week by an average 25 per cent, with analysts and markets anticipating a sharp devaluation of the over-valued peso currency shortly after Mr Milei takes office. 

"We know in the short term the situation will worsen but then we will see the fruits of our efforts," Mr Milei said. 

"We don't seek or desire the tough decisions that will need to be made in the weeks ahead, but unfortunately we have no choice."

Reuters