By Henry Srebrnik, [Fredericton, NB] Daily Gleaner
Argentina’s libertarian President Javier Milei is often derided by western media as a political kook. But is that a really fair assesment?
When Argentina elected him in October 2023, the economic and political establishment confidently predicted he would only last a few weeks. And yet, not only has Milei managed to stay in power, but the evidence also suggests that he is turning Argentina around.
Under Milei, Argentina has achieved a historic milestone by eliminating its fiscal deficit for the first time in 123 years, an achievement attributed to several aggressive economic reforms and austerity measures implemented since he took office.
Milei’s administration, promising to pull Argentina out of a dire economic crisis, undertook substantial reductions in government spending, which included slashing financial transfers to provinces and eliminating subsidies for energy, transport, and other sectors. These cuts were part of a broader strategy to stabilize the economy and restore fiscal balance.
As part of the austerity measures, several government agencies were dissolved, including the Ministries of Culture, Health, Labour, and Social Development. This move aimed to streamline government operations and reduce public sector employment by the thousands.
Last March Milei announced a cut of 70,000 employees from Argentina’s public sector workforce; and by June, about 25,000 of those job cuts had been accomplished. Then, in early June, he laid off an additional 50,000, as part of his plan to “reduce the state in half.”
When Milei assumed the presidency, as inflation was heading towards 200 per cent, he warned that he had no alternative to a sharp, painful fiscal shock to fix the country's worst economic crisis in decades.
He faced rising poverty and a polarized population as challenges for his presidency. As well, his political party, La Libertad Avanza, was in a weak position in Congress, with only 40 seats in the 257-member Chamber of Deputies and seven of 72 in the Senate.
“There is no alternative to a shock adjustment,” he stated on the steps of Congress after taking office. “There is no money.”
During the first six months of his presidency, poverty did increase, but it was already rising under the previous administration, and hyperinflation accelerated both before and after his inauguration, making it unclear to what extent the increase in poverty was directly linked to his policies. In any case, by the end of 2024, it was decreasing.
As well, the monthly inflation rate had slowed to 2.4 per cent, the lowest in over four years, according to the official INDEC statistics agency. This decrease in the rate of inflation was driven primarily by the government’s elimination of deficit spending, leading to a decrease in monetary expansion.
There’s still a long way to go. The economy has taken longer to reactivate, squeezing many consumers, especially in the public sector where Milei’s spending cuts have been the hardest.
“I don't know much about inflation, but I know that when I get my salary, it’s gone in a couple of days,” teacher Aida Segot told Reuters. “Each month it used to run out on the 20th; now it runs out on the 12th.”
Milei’s approach has garnered attention both domestically and internationally, with figures like Elon Musk praising his efforts. However, the long-term sustainability of these measures remains uncertain as Argentina continues to grapple with inflation and social challenges.
Still, after a year in office, the political outsider’s support remains robust, with many remaining more angry with the mainstream politicians he replaced after years of rising prices and economic distortions. And a recent economic forecast for 2025 published in the Buenos Aires Times predicts Argentina’s GDP growth to come in at 8.5 per cent this year.
Argentina is an enigma -- a country with great promise ruined by a terrible political culture. At the beginning of the 20th century, it was the seventh-richest country in the world, but it declined under authoritarian rule, military coups, and corruption. Milei has a steep hill to climb.
Although some people have voiced concerns regarding a potential authoritarian vein among Milei and his followers, so far he has been respectful of the democratic process and institutions. Anyhow, his weakness in Congress makes it extremely unlikely that he could pass any measures that may weaken the democratic order.
Meanwhile, Milei has recently been granted Italian citizenship while on a visit to Rome, where he held talks with Italian Prime Minister Giorgia Meloni. The decision is based on Milei’s Italian ancestry. He has expressed a strong connection to his Italian roots, stating that he feels “75 per cent Italian” due to his family’s heritage.
It is estimated that at least 25 million Argentinians, more than half of the country’s population, have some degree of Italian ancestry.
Like other political outsiders around the world, Milei had accurately identified many of the country’s real problems: inflation, high and inefficient public spending, political capture, and corruption. He has reached the milestone of one year in office surrounded by a sense of triumph.
Milei has also projected this optimism, saying in a speech from the Casa Rosada on Dec. 10 that the country can look forward to a “future of prosperity” that for many Argentines was still “unimaginable.” With Donald Trump now entering the White House, Milei will have a strong ally in Washington.
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