During his first year in office, Argentina’s President Javier Milei has seen a rise in popularity, due to his success in reducing headline inflation, cutting the fiscal deficit, and in taking important steps towards deregulating the economy.
Milei considers himself an anarcho-capitalist, a political philosophy associated with the Austrian school of liberal economists, which claims that government institutions are unnecessary and can be replaced by private ones. Despite campaigning for a full dollarisation of the economy and closing the central bank, his efforts to stabilise the Argentinean economy have followed a more orthodox approach.
The first stage of the stabilisation plan was initiated in December 2023 and has four main pillars: (1) A monetary adjustment, (2) a fiscal adjustment, (3) rebuilding the central bank’s balance sheet, and (4) a tax amnesty for capital repatriation and investment promotion.
All these measures have helped to kickstart the economy, which was on the verge of a deep economic crisis. Inflation declined from 25% month-on-month (MoM) in December 2023 to 2.9% MoM in December 2024, while annual inflation decelerated to just under 120% in 2024 after peaking at almost 290% in April.
Milei’s economic objectives for 2025 are likely to focus on (A) removing capital controls, (B) returning to international debt markets, and (C) gaining support in the midterm elections. Success in all these areas would be the most optimistic scenario for Argentina.
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