Argentina’s Milei defies his doubters
Inflation rate falling as many protest cuts
Argentina’s chainsaw-wielding, selfproclaimed “anarcho-capitalist” president who has said he takes most of his political advice from his dogs has appeared to achieve what many political analysts and economists said his radical plans almost certainly wouldn’t: modest improvements to the country’s economy.
Javier Milei, 53, a former right-wing economist and television pundit whose combative style and embrace of conspiracy theories have drawn comparisons to former U.S. President Donald Trump, took power in December.
Five months since he was sworn in, Argentina still has one of the world’s highest annual inflation rates − a cumulative figure of 287% as of March, according to Bloomberg data − but Milei’s libertarian-laced austerity “shock” measures have translated into lower inflation rates for three consecutive months.
When national inflation figures for April are released this week, there are some indications that Argentina’s economy could see a return to a single-digit monthly inflation rate for the first time since October 2023.
In his first weeks in charge, Milei made deep spending cuts to Argentina’s public sector, halted new infrastructure projects, reduced energy and transportation subsidies for residents and cut in half the number of Argentina’s federal ministries. He also devalued the nation’s peso currency by more than 50% against the U.S. dollar.
Ian Bremmer, the founder of the Eurasia Group political and economic risk consultancy, wrote in an emailed newsletter Wednesday that when Milei was elected, many experts expected his plans for the economy would lead to “further collapse in short order.”
“Thankfully for the people of Argentina, that didn’t happen,” he wrote. “Monthly inflation has come down every month for the past three months, from 25% in December to nearly 10% in March, with forecasters expecting the April figure to come in at single digits. The government did this by turning the 5.5% budget deficit it inherited into the country’s first surplus in over a decade, while boosting the central bank’s reserves, lowering its benchmark interest rates, and reducing the money supply − all without destabilizing currency and financial markets.”
An unconventional leader
Latin America’s third-largest economy has struggled with economic and political dysfunction for decades. It has defaulted on its sovereign debt nine times. It has borrowed tens of billions of dollars from the International Monetary Fund and, more recently, China as it grapples with economic turmoil.
Milei has long claimed to adhere to a strain of libertarianism that has at its heart a political and economic philosophy that effectively calls for the abolition of the state. During his campaign, he repeatedly brandished a chainsaw to symbolize his intent to slash public spending to fix Argentina’s troubled economy. He also claimed he was considering “blowing up” Argentina’s central bank, which hasn’t happened.
He has characterized climate change as a “socialist plot” and has consistently downplayed the atrocities committed by Argentina’s military dictatorship in the 1970s and 1980s.
Musk is a fan
He has appeared to bond with Tesla and X owner Elon Musk over free markets and the need to defend liberty and personal freedoms.
“I recommend investing in Argentina,” Musk said in a recent X post in which he was pictured for the second time in less than a month giving a thumbs up alongside Argentina’s leader.
Still, many Argentines complain that Milei’s economic policies have made their lives harder in the short-term, with the spending cuts hitting salaries and pensions that are far from keeping up with inflation.
Labor unions across Argentina held a 24-hour nationwide general strike on Thursday as Milei’s cost-cutting program has led to sharp contractions in consumption, construction and manufacturing activity. Mass protests against budget cuts to public universities recently drew more than 400,000 people.
Claims policies target political class
Argentina’s central bank last week was forced to issue its first 10,000-peso note, worth about $11, because many residents have been carrying around large wads of bills to make even small payments. Many businesses in Argentina still prefer to deal in cash in part because of chronic economic instability.
In an interview with the BBC last week, Milei nevertheless insisted his economic reforms were working and chiefly targeting Argentina’s political class − its elite − not ordinary citizens.
“There is no magic, real life needs time,” he said, defending his policies.
“What would have been the alternative? To continue to print money like the previous administration that generates inflation and ends up affecting the most vulnerable?”