December marks the first anniversary of Javier Milei’s swearing-in as president of Argentina. This is the perfect time to summarize his most important achievements to date.

I wrote about this controversial politician in January, when he began his term. He was an eccentric. During the election campaign, he promised the abolition of the central bank, the unilateral adoption in Argentina of the U.S. dollar as a circulating currency, and drastic cuts in spending and bureaucracy. To illustrate these promises he performed with a chainsaw, which was constantly mocked by his opponents. Many commentators regarded him as a frivolous person who, quite by accident, found himself in Casa Rosada, the seat of Argentina’s presidents, simply because citizens were fed up with galloping inflation, an unstable currency, and the country’s bankruptcies that occurred every few years.

On the other hand, even those who saw Milei as little more than a demagogue with a chainsaw expressed concern that the announced reforms could be torpedoed by popular opposition, especially from the Peronist-controlled labor unions. His La Libertad Avanza (Freedom Advances) party has only a handful of representatives in the Senate and the Chamber of Deputies.

Immediately after taking office, Milei presented an ambitious economic program with a comprehensive “Omnibus Law” containing more than 600 specific proposals and an Emergency Decree. Key points in the law include:

• Privatization of several large state-owned enterprises,
• Tax reforms, including income tax cuts,
• Emergency law granting the president special powers to govern certain areas for up to two years,
• Deregulation of the economy to reduce state intervention in the economy, as well as cuts in subsidies,
• Electoral reforms, including radical changes to the electoral system.

To pass the bills, Milei must seek support from the middle class and moderate Peronist parliamentarians. The president managed to push through the “Omnibus Law” in Congress in July, albeit in a much truncated form. The Emergency Decree, an instrument used by previous Argentine presidents to govern, is still in effect. It was rejected by the Senate, but not yet by the Chamber of Deputies. The success in parliament, though not complete, has shown that Milei is not a dreamer, but an effective politician.

The tax amnesty program, which encouraged Argentine residents to deposit foreign currency, previously tucked away under mattresses or in bank accounts abroad, was also a success. This practice had been going on for years. Argentines avoided domestic banks, fearing insolvency, low interest rates, and the falling value of the peso. It is estimated that Argentines hold about $277 billion outside the official banking system. Part of this sum comes from illegal or untaxed income.  The amnesty allowed up to $100,000 to be disclosed without consequence or taxation and deposited into the country’s banks. Sums over this amount were taxed at a rate of 5%.

Thanks to the amnesty, Argentines deposited about $18 billion in the country’s banks, and deposits in dollar-denominated private bank accounts rose to $32.5 billion. The lack of adequate foreign exchange reserves was the cause of Argentina’s insolvency in 1982, as well as in 2001, 2014, and 2020.

During the election campaign, Milei promised that fighting inflation, which was 211 percent in 2023, would be his top priority. Milei succeeded in significantly lowering the inflation rate thanks to strict austerity measures. In October 2024, monthly inflation was 2.7 percent, and annual inflation is still high, but falling. The government forecasts inflation at 104 percent this year and 18.3 percent next year, while the IMF forecasts are more pessimistic at 140 percent and 45 percent, respectively.

In addition to fighting inflation, Milei’s priority is to repair the budget. The president, who declares himself a libertarian, regards the state as a fundamental evil and considers only the protection of public order and the legal system as legitimate state tasks. Immediately after taking office, Milei began cutting public spending by abolishing or merging ministries and subordinate bodies. In addition, public sector wages, salaries, and pensions grew slower than inflation, resulting in real budget savings. Infrastructure projects were also put on hold, to be privately financed in the future. Milei achieved further reductions in state budget spending by – constitutionally controversial – deferring central government payments to the provinces.

Since the beginning of 2024, the Argentine budget has closed with a surplus for the first time since 2008. The fiscal discipline put in place is also an important precondition for further negotiations on debt restructuring with the IMF, of which Argentina is the largest debtor. The US$44 billion loan was negotiated in 2018 under then-President Mauricio Macri.

Under the Emergency Decree, which came into effect at the end of 2023, Milei introduced a radical liberalization of rental law. Under the Peronist government, rental contracts were subject to several restrictions: the term of the contract had to be at least three years, hyperinflation adjustments were allowed only once a year, and contracts had to be in the local currency, the peso, which was suffering from a chronic decline in value. As a result of these restrictions, many owners refrained from renting or listing their apartments for sale, preferring to leave them vacant as investment and speculative properties.

Consequently, demand for apartments far exceeded the available supply. The liberalization introduced by Milei has meant that when renting apartments, terms and currency can be freely negotiated and changed quarterly. Real estate portals immediately recorded a more than doubling of the number of apartments on offer.

Part of the “Omnibus Law” is the RIGI investment promotion package (Régimen de Incentivos para Grandes Inversiones) which includes 30-year tax breaks and foreign trade facilitation for companies making large investments (over $200 million) in selected sectors, including energy, resource extraction, infrastructure, technology. The law went into effect in July, and the first foreign companies have already announced their intention to invest in Argentina. They are encouraged not only by the tax breaks but also by the fact that Argentina is much better rated on international markets.

Argentina is not only rich in agricultural products but also has attractive conditions for investment in the energy and raw materials sector. The country has significant gas reserves and excellent conditions for green energy expansion.  According to government estimates, Argentina will be able to produce more than 1 million tons of green hydrogen annually by 2030. It also has deposits of copper and lithium, which is important for battery production. China has invested in Argentine raw materials. The Milei government would prefer investment to come from democratic and predictable countries.

It is no surprise that the libertarian government’s successes in reducing inflation and the budget deficit have not yet translated into an improvement in the country’s real economic situation. On the contrary, Argentina is in a severe recession, with both Argentine and international economists expecting a decline of nearly 4% in GDP this year. Fiscal austerity and benefit cuts have caused consumer demand to fall by more than a dozen percent over the year, and a near-total halt in public investment has further hampered economic growth. Milei appeals to the population for patience and promises to restore strong GDP growth, and consequently, an unemployment orchard and real income growth, as soon as the dominant problem, inflation, is permanently resolved.

According to analysts at Spanish bank BBVA, which has extensive operations in South America, Argentina’s GDP will fall by 4 percent this year, grow by 6 percent in 2025 and 4.6 percent in 2026. Investment will fall by 25 percent this year, grow by 15 percent in 2025, and 21 percent in 2026. Inflation will fall to 40 percent next year and 25 percent in 2026. Public debt will fall from 100 percent of GDP this year to 78 percent in 2026.

Argentina’s October 2025 by-elections, which will decide half of the seats in the lower Chamber of Deputies and a third of the Senate, will be a key barometer of the president’s chances not only of implementing his economic plan, but also of becoming a major political force.

The situation in Argentina is worth following, as it could be an example for countries where handout policies have been pursued for years, leading to uncontrolled growth in public debt, inflation, and stunted growth. Argentina shows that only a hopeless economic situation resulting in worsening poverty can get voters to accept a tough market reform program.

Written by Witold Gadomski (Gazeta Wyborcza) for Economic Freedom Foundation

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