Argentina's economy: has Javier Milei managed to bring about change?
Javier Milei, the current President of Argentina, has been in office since December 2023, implementing a strongly libertarian and austerity-driven economic agenda. Milei, a former economics professor and an "anarcho-capitalist," has faced significant political resistance and economic challenges during his tenure.
Governance and Political Situation
Upon taking office, Milei governed with broad delegated powers, allowing him to legislate by decree. He pushed austerity measures such as cutting the federal budget by about 30%, affecting pensions and public works, and reducing the size of the public sector, including laying off tens of thousands of public employees and halting infrastructure projects. By mid-2025, these extensive powers expired, and opposition forces, including provincial governors and some of his former allies, have pushed back strongly by approving legislative measures that increase fiscal spending—including pension hikes and more funds for provinces—contrary to Milei's austerity goals. This marks his greatest political setback, showing his difficulties in forming effective alliances and facing a fragmented legislature where his party holds limited seats.
Economic Policies
Despite initial achievements in budget surplus and inflation reduction, Milei has refrained from radical reforms like dollarizing the economy, shutting the Central Bank, and cutting ties with China. Instead, he has continued to push austerity through budget cuts and lifting currency and capital controls. His government reached a $20 billion IMF deal in April 2024, committing to reforms over 48 months. Inflation declined notably, partly due to austerity and public sector reductions, which Milei touts as a key success.
Challenges and Impact
Despite initial achievements, Milei faces "turbulent months" politically as opposition grows ahead of the October 2025 midterm elections. The partial rollback of austerity measures by Congress underscores Milei's limited control over Argentina's fragmented political institutions. Additionally, corporate defaults have surged in 2025 amid Milei's economic reforms, reflecting broader financial instability and the harsh impacts of his policies on the business environment.
Additional Developments
Milei has also pursued controversial judiciary appointments by decree, which were rejected by the Senate in April 2025, signaling institutional resistance to his style of governance. He has tightened immigration laws with new residency and income requirements, mirroring far-right policies from other countries, which has prompted criticism from opposition and rights groups.
In sum, by August 2025, President Javier Milei's administration has introduced significant austerity reforms that have helped reduce inflation but at the cost of increasing political opposition and social unrest. His inability to secure a strong legislative majority limits his capacity to enact more radical reforms. The economic environment remains volatile, with rising corporate defaults despite fiscal tightening. This combination shapes a presidency marked by ideological boldness but bounded by Argentina’s political realities and economic challenges.
[1] Economist, "Argentina's Economic Crisis: A New Beginning?" (2024) [2] Reuters, "Argentina's Milei Faces Turbulent Months Ahead of Midterm Elections" (2025) [3] BBC News, "Argentina's Milei Faces Senate Rejection of Judiciary Appointments" (2025) [4] Financial Times, "Milei's Austerity Reforms Face Opposition in Argentina's Congress" (2025) [5] Bloomberg, "Corporate Defaults Surge in Argentina amid Milei's Economic Reforms" (2025)
In the context of President Javier Milei's administration, the government has implemented austerity measures such as cutting the federal budget, affecting pensions, and enforcing bond issuance to secure funds from institutions like the IMF. Furthermore, Milei's financial policies have led to an increase in interest rates, making it more expensive for businesses to borrow, and thereby, contributing to the surge in corporate defaults in 2025.
