Early in 2024, Buenos Aires had a certain feel to it. It wasn’t exactly despair, but rather something akin to weary resignation, the kind that arises when a nation has witnessed so many currency depreciations that its citizens have created intricate daily routines centered around not believing the price tag. In the middle of their shift, supermarket employees were altering pricing. Elderly people were mentally performing computations that they wouldn’t have needed a year earlier.
The monthly rate of inflation was close to 26%. Javier Milei, a former television economist who liked Ludwig von Mises and leather jackets, entered this. At campaign rallies, he brandished a faux chainsaw and vowed to do to the Argentine state what most economists believed would result in an instantaneous social collapse. Instead, the excess showed up. Not right now, and not for free. However, it came.
For the first time in more than fifteen years, Argentina’s primary fiscal balance concluded 2024 in surplus. When Milei assumed office in December 2023, this statistic would have appeared somewhat ridiculous. Nine times in its history, the nation had fallen behind on its sovereign debt. In order to address persistent government deficiencies, the central bank had been effectively printing money. The peso was plummeting.
| Subject | Javier Milei’s economic reform programme — “shock therapy” austerity applied immediately upon taking office in December 2023, producing Argentina’s first sustained budget surplus in over 15 years |
|---|---|
| Milei Took Office | December 2023 — inheriting an economy with monthly inflation near 26%, deep fiscal deficits, and depleted foreign currency reserves |
| Fiscal Result | First consecutive monthly budget surpluses in over 15 years — primary fiscal balance ended 2024 in surplus after years of structural deficit |
| Inflation Drop | Monthly inflation fell from nearly 26% in December 2023 to approximately 1.5%–3.5% by mid-2025 — one of the fastest disinflation episodes in modern Latin American history |
| Growth Forecast | Economy expected to grow over 4% in 2025 after a contraction in 2024 caused by the initial austerity shock |
| Credit Rating | Moody’s upgraded Argentina’s outlook, citing improved government finances — a significant shift for a country that has defaulted on sovereign debt nine times |
| Social Cost | Temporary spike in poverty rates and a significant decline in real wages before signs of stabilisation emerged in late 2025 — the most contested dimension of the reform programme |
| Key Methods | Drastic public sector cuts, ministry closures, suspension of public works contracts, elimination of price controls, and central bank balance sheet reform |
| Political Constraint | Milei lacks a congressional majority — structural reforms require negotiation with opposition legislators, complicating the next phase of the programme |
Since then, Moody’s has raised the nation’s credit outlook, citing better government finances. This is the kind of institutional recognition that, despite its limitations, is significant. Investors have taken note. What the excess cost the individuals who required the expenditure it replaced is the question the data don’t address, the one that necessitates strolling through a Buenos Aires neighborhood instead of reading a spreadsheet.
Unfairly, Milei’s approach has been referred to as “chainsaw politics”; this term came from both the pace at which his administration operated and his own campaign imagery. Jobs in the public sector were eliminated. Contracts for new public works projects were put on hold. The swift closure or merger of ministries left professional public officials with little notice and little time to adjust. Price controls were removed.
Based on the idea that the Argentine state had built so many layers of interference over so many decades that surgical removal was just not a feasible option, the deregulation effort was swift, widespread, and purposefully indiscriminate. People who disagree with the facts in good sincerity continue to debate whether that idea was true.
The easiest element of the story to understand is the inflation figures. One of the quickest disinflation events in contemporary Latin American economic history, monthly inflation dropped from 26% in December 2023 to between 1.5% and 3.5% by mid-2025. That is a genuine and noteworthy accomplishment, especially in a nation where persistent inflation had been so ingrained in daily life that it had altered people’s perspectives on money, savings, and planning.
However, because the currency devaluation that followed the austerity push reduced purchasing power more quickly than wages could be renegotiated, real wages fell precipitously in the first few months of the adjustment. Rates of poverty increased. The stabilization that followed in 2025 was real, but it came after a period that was extremely difficult for those who were least able to handle it.
Observing Argentina from the outside, it seems as though the global discourse surrounding Milei’s program has divided into two factions that are speaking over one another. The surplus and disinflation are cited by libertarian enthusiasts, who are concentrated in specific areas of the financial press and among economists in the US and Europe who share their ideology, as a justification. Critics describe it as a humanitarian failure and point to the rise in poverty and wage compression.
Both sets of facts are true. The challenge is that economic history is often uncomfortable with definitive conclusions, particularly when the narrative is still developing. After contracting in 2024, Argentina is predicted to increase by more than 4% in 2025. This seems like a plausible recovery trajectory, as long as the growth spreads widely enough to restore the purchasing power that the adjustment destroyed.
The experiment becomes very challenging in the political math of the next stage. Milei does not have a majority in Congress. It is necessary to negotiate with lawmakers who did not run on his platform and represent constituencies that were particularly affected by the austerity in order to implement the structural reforms he seeks to implement, such as modifications to labor law, pension plans, and the regulatory frameworks that have historically created the spending pressures his cuts addressed.
It’s unclear if the surplus will provide him enough credibility with those lawmakers to forward the program, or if the social pressure brought about by the adjustment would result in opposition before the people who paid the price gain from stabilization.
Argentina has previously visited, although in a different register. The nation’s economic history is replete with instances that appeared to be turning points but ended up being pauses. It’s too soon to tell which one this is. The chainsaw performed its usual function. The Argentine economy is currently questioning if what remains after the cuts is robust enough to keep things together.
