Argentina, once among the world’s wealthiest nations, has faced severe economic difficulties over the past 25 years. A year ago, libertarian economist Javier Milei assumed the presidency, promising sweeping reforms to tackle the crisis. Known for his flamboyant personality and polarizing views, Milei has been both praised as a visionary reformer and criticized as “El Loco” (“the mad one”). He vowed to overhaul Argentina’s political and economic system, pledging to adopt free-market principles and dismantle state bureaucracy.
A Nation in Crisis
Argentina’s economic challenges stem from decades of instability, protectionist policies, and fiscal mismanagement. Once prosperous due to agricultural exports and global market integration, the nation’s trajectory faltered under Peronism—a political ideology that emphasized economic independence and social justice. While Peronism improved conditions for the working class, critics argue it entrenched inefficiency and over-reliance on state support. By 2023, the economy faced hyperinflation of 211%, a poverty rate exceeding 40%, and a devalued peso.
In this environment, Milei’s promise of radical change resonated with voters. He campaigned on dismantling Argentina’s bureaucracy, privatizing industries, and implementing libertarian policies to stabilize the economy.
Radical Reforms and Immediate Impact
Over the past year, Milei has introduced aggressive reforms. Government spending was slashed by a third, subsidies on energy and transport were reduced, and the peso was devalued by 54%. These measures helped achieve fiscal surpluses but intensified the economic crisis.
More than 30,000 government jobs were cut, and over half of the ministries were dissolved. Inflation significantly eroded pensions and salaries, worsening poverty. The poverty rate surged to 53%, with 15% of the population in extreme poverty—levels unseen in 30 years. During Milei’s first six months in office, an additional 5.5 million Argentines fell into poverty.
Despite the hardships, Milei’s approval ratings remain steady at around 50%, partly due to his consistent attacks on establishment politics and unions. Protests have been limited, though a significant demonstration occurred after cuts to public university funding.
Legislative Achievements and Economic Indicators
Milei’s major legislative success was his controversial “omnibus” reform bill. Although watered down, it aimed to privatize public enterprises, enforce a zero-deficit policy, and cut government spending. These reforms produced noticeable improvements: monthly inflation dropped from 26% in December to 2.7% in October, and Argentina’s risk index for investors decreased significantly.
However, challenges persist. The strengthened peso has hurt exporters, raising concerns about future devaluation and inflation. The IMF projects a 3.5% economic contraction this year, with growth of 5.2% expected next year—just enough to return per-capita GDP to pre-pandemic levels. Milei’s proposed 2025 budget targets a surplus of 1.3% of GDP, requiring further spending cuts.
Political Challenges and International Relations
Milei’s reforms have drawn criticism from political opponents and the public. A November veto of increased university funding sparked protests involving 250,000 people. Former president Cristina Fernández de Kirchner, a prominent leftist figure, is poised to lead the Peronist party in next year’s midterm elections, though her influence has waned.
On the international front, Milei’s alignment with U.S. President-elect Donald Trump may bolster his efforts. Milei hopes to secure support from the IMF to roll over a $44 billion debt incurred during Trump’s previous term. Additionally, $10 billion is needed to stabilize Argentina’s critically low central bank reserves.
The Road Ahead
Milei’s success depends on securing international funding and implementing further reforms to lift capital controls and attract investment. While some economic indicators have improved, sustainable growth remains elusive. As Argentina’s political and economic challenges persist, the nation’s future hangs on Milei’s ability to balance reform with public demands.
