One year ago this month, Javier Milei assumed the presidency of Argentina following decades of economic decline and social crisis with a promise to “take a chainsaw” to government spending and return Argentina to the free-market principles that once made it one of the richest countries in the world. On both counts he has achieved a historic level of success just 12 months in.
It is difficult to overstate the dire economic straits Argentina found itself in when Milei assumed office last December. Inflation was over 200 percent in 2023, the poverty rate was 40 percent, the economy was shrinking, and the national debt was exploding out of control.
Following multiple unsuccessful attempts from prior socialist governments to stabilize monetary and fiscal policy, international trading partners and investors were growing ever more wary of doing business in Argentina. As a result, the country was cast into a crisis of social fragmentation and political polarization – both of which helped thrust Milei into office.
What has occurred since then is truly remarkable. Monthly inflation fell from 25 percent last December to 2.7 percent in October. Milei cut spending by 30 percent. According to the Cato Institute, Milei has also averaged 1.84 regulatory reforms per day.
In perhaps his most significant achievement, Milei ran a surplus in his first month in office, a surplus that has continued to grow throughout his tenure. This has alleviated pressure on the central bank to finance government spending through “temporary transfers” that are rarely repaid.
“Nobody can doubt that we are in the best moment since the president’s inauguration,” Economy Minister Luis Caputo said recently, and he was correct.
Inflation-adjusted wages have now increased for six consecutive months. A tax amnesty program successfully raised more than $20 billion for the treasury. The gap between Argentina’s official and parallel currency exchange rates, which acts as an unofficial risk indicator, is currently at 16 percent, its lowest level in five years.
All of this success is the direct result of Milei’s reforms, starting with his famous promise to “take a chainsaw” to government spending. In total Milei has closed 100 agencies, reduced the number of government ministries from 18 to eight, halted most public works, and ended most money transfers to regional governments. The federal government also ordered an audit into the finances of public universities, resulting in a 20 percent reduction in subsidies.
A concerted effort to cut red tape has also been at the heart of Milei’s reforms, making it easier for Argentinians to open and run businesses.
In South America, implementing significant and bold economic reforms has always been a gamble for politicians, and Milei’s program was no exception. Professor Giacobbe Gasparo Provenzano, a former advisor on financial policy to Italian Prime Minister Amintore Fanfani, who currently resides in Peru, told me in an interview, however, that Milei “is in a different situation than his predecessors.”
“President Milei established the foundations for his reforms before taking office,” Professor Provenzano said. “He informed voters and prepared market participants, eliminating any room for misunderstanding or shock.”
As a result, even with some expected shocks to the economy, Milei’s approval rating remains at a relatively robust 52.3 percent. Argentinians trust Milei and understand that many of his reforms may be painful in the short term, but that they are nonetheless in the long-term best interests of the country.
For decades, the Argentinian government has been the largest employer in the country, creating illusions of economic activity without any real growth. “Argentinians recognize unemployment and poverty rates will rise temporarily after this fiction ends, but genuine economic growth will follow,” said Professor Cordero Quiñones, a former advisor on economic affairs to Brazil’s President João Figueiredo.
Investment is slowly returning to the country, as traders and creditors regain confidence in the stability and transparency of the Argentinian economy. Traders are seeking longer maturities for fixed-rate bonds for Argentine pesos, a sign of confidence in the future.
Larger businesses are also betting on a full recovery of Argentina’s economy by making long-term investment plans like opening new offices and production plants. A major reason for this is Milei’s commitment to energy production, with Argentina producing 35 percent more oil in the third quarter of 2024 than the same time period last year, along with increasing natural gas production. This month, the U.K. mining giant Rio Tinto also announced plans to invest $2.5 billion in a new lithium mine in Argentina, citing encouragement from Milei’s efforts to deregulate the country’s economy.
Just as importantly as these concrete improvements, Milei has continued to be honest with voters about his reforms and explain his economic agenda in detail. The social media channels for Milei and his party are filled with articles and videos explaining how spending cuts, deregulation, and tax reductions are driving economic growth.
“These mini lessons are more effective at sustaining support than advertising campaigns,” Professor Provenzano said.
For Western liberals, Milei’s first year in office was even more successful than they feared. In 12 months, Milei not only laid bare how socialism and statism will inevitably fail everyday people, but proved that real progress is possible if only a leader is bold and determined enough to tear down the failed systems the left has worked so hard to construct.
Ben Solis is the pen name of an international affairs journalist, historian, and researcher.
