Charlatan or genius? What Javier Milei has achieved economically so far in Argentina
By Federico Fo
Javier Milei, the Argentinian president elected in November of 2023, is well-known around the world for his controversial positions regarding the treatment of national economies, as well as for his political position, which strongly supports a libertarian political and economic system. Such a position may also be referred to as a type of anarcho-capitalism, that opposes any kind of State intervention in the economy. Argentina’s economy is known worldwide for its economic fragility. In response, Milei pledged at the beginning of his mandate to particularly focus on the structural problems of the Argentinian economy, promising to do so through the application of his political and economic beliefs. Argentina has thus become a prominent laboratory for economic and political experiments, attracting attention in the international political environment. In this article, we will explore what Milei has accomplished so far.
President Javier Milei with Vice-President Victoria Villaruel; picture by Càmara de Deputados de la nacion Argentina; Public Domain; No changes made; retrieve 18/03/2025; https://www.diputados.gov.ar/prensa/noticia/LA-ASAMBLEA-LEGISLATIVA-PROCLAMO-LA-FORMULA-PRESIDENCIAL-JAVIER-MILEI-VICTORIA-VILLARRUEL/
The main issue facing the Argentine economy at the beginning of Milei’s mandate was hyperinflation, with the country experiencing an inflation rate of 211%. To address this, Milei introduced a series of austerity policies, including cuts in public expenditures. These policies helped stabilize the situation, reducing inflation to a historical low of 80% at the time of writing. Additionally, the reductions in public expenditures contributed to the achievement of a sustained budget surplus for the Argentinian State, breaking the long-standing budget deficits.
Unfortunately, all of this came at a cost. Public expenditure cuts led to the dismissal of at least 30.000 public officials and reductions in subsidies for essential services such as transportation and food, causing prices to increase and the average purchasing power to decrease. Additionally, consumption patterns shifted towards higher foreign imports due to a newly implemented crawling exchange rate. Although the Argentinian ‘pesos’ was officially devalued, it remained significantly below inflation rates, making it unofficially overvalued and benefiting imports by making them cheaper. This situation led to a decline in local consumption, triggering a domino effect that resulted in a general economic recession and an increase of unemployment to 8%, as local firms fired their workers. Consequently, poverty rates surged to 50%.
Nonetheless, the Argentinian public never completely withdrew its support to Milei’s policies, despite their initial severe consequences. Data shows that support for Milei remained at around 50%, despite the widespread economic hardship of different households. Such trust in the presidency ultimately proved beneficial, as poverty rates significantly declined at the beginning of 2025, achieving levels between 30% and 40%. Moreover, Milei’s new policies have begun to yield positive results. Since September 2024, wages have increased at a rate higher than inflation, marking the first signs of economic recovery for the country, as Argentina emerges from the first phase of Milei’s economic reforms. In fact, the World Bank projects an economic expansion of 5% for Argentina in 2025.
Nevertheless, experts highlight that, despite the improvement in poverty rates, Milei’s policies may still lead to a rise in structural poverty. This is because cuts in public expenditures increase multidimensional poverty, which extends beyond income levels to include access to essential services such as education, sanitation, and clean water.
Javier Milei signing a decree to reform Argentinian economy; picture by Casa Rosada (Argentinian Presidency of the Nation); https://www.casarosada.gob.ar/ / https://it.wikipedia.org/wiki/Javier_Milei#/media/File:Milei_anuncia_el_DNU.jpg ; retrieved 18/03/2025, no changes made.
Regarding unfulfilled promises, Milei has not yet further liberalized trade and the capital market, though he has reiterated his intention to do so in future, once the economy stabilizes. However, more notably, he has not yet dollarized the Argentinian economy – one of his main proposals during his political campaign before the elections. For some analysts, this may indicate a shift in Milei’s vision, as he currently appears to be prioritizing more permanent and stable monetary systems.
Dollarization may still serve as a way to mitigate problems stemming from Argentina’s inefficient institutions, which have throughout the years terribly managed the exchange rates of the pesos. However, it is important to note that this would come at the cost of a losing in monetary autonomy. In the event of financial shocks, this could backfire, as Argentina would no longer be able to devalue its currency to make exports more competitive—an approach commonly used by emerging markets during economic crises.
Consequently, after 1 year in office, Javier Milei has managed to fulfil his promises, at least to a certain extent. However, this is not solely due to his economic vision but also to the necessity of restoring confidence in Argentina’s economy among foreign investors—particularly international lenders like the International Monetary Fund (IMF). Milei aims to re-negotiate Argentina’s debt and secure new loans, an effort bolstered by his close relationship with the newly elected U.S. president, Donald Trump, whose influence on the IMF board could play a crucial role in securing a favorable deal for Argentina.
In conclusion, Javier Milei’s mandate has begun with a multitude of reforms that, so far, attracted an overall praise among economists and investors, raising hopes that Argentina may finally break free from an economic dysfunctionality that lasted since the beginning of the 20th century. However, it is still too early to determine the final outcome, fueling even more curiosity about the future trajectory of Milei’s economic policies.
