“Es sospechoso” our Argentinian tour guide said. When I visited Argentina over winter break, I heard from everyone that Argentina was in a new period of growth – newly-made friends, tour guides, and friendly strangers. Argentina has been in an economical collapse since 1998 because of the continual corruption within their leaders. However, in 2023, a new president was elected. Javier Gerardo Millei claimed that he will make Argentina great again. He has implemented several reforms to combat long standing problems such as hyperinflation, recession, and high poverty rates.

One of the major contributors to Argentina’s major recession is that its inflation exceeded 200%. To combat this hyperinflation, Milei initially proposed dollarizing the economy. However, this plan evolved into promoting competition between the peso and the dollar, allowing citizens to choose their preferred currency. This approach aims to strengthen the peso while providing flexibility in transactions. Financial markets have responded positively to these reforms as the government successfully eliminated a fiscal deficit that had been ongoing for 123 years. To add to these combative measures, Millei cut down energy and transportation subsidies and reduced the public sector workforce by approximately 30,000 positions, which have indeed yielded positive results. All of Millei’s implementations worked, as Inflation rates have shown signs of decline, with monthly rates decreasing from 13% to 2.7% over the course of 2024, marking the lowest level in three years. Argentina also achieved consecutive monthly budget surpluses, a rare occurrence in its recent economic history.

Millei introduced what is known as free market stock therapy, which has historically been known to cause high inflation, anemic growth and credit defaults earned him the name “el loco.” However, this strategy proved to work as the expected inflation is to drop from 220% to 40%. In recognition of these improvements, Moody’s upgraded Argentina’s long-term foreign currency sovereign credit rating from “Ca” to “Caa3” in January 2025, marking the first upgrade in five years. This entails that Argentina’s stock market is now deemed in a much better rating, instead of the previously very speculative market that the scale deemed it to be.

However, the reduction of subsidies and public sector employment has contributed to an increase in the poverty rate, which reached 52.9% during the first six months of his administration. With these challenges, Millei claims that he will now start fostering investments and implementing structural reforms, which will reap social prosperity along with economic development. But, many of the local Argentinians, North and South seem to agree that this is the most amount of improvement they have seen in decades. They seem to trust the new president hoping that short-term problems will be sacrificed with long-term gains. For now, the citizens must sit at the edge of their seats, waiting to see what will happen in the forthcoming years.

Works Cited

Aires, Vera Bergengruen/Buenos. “President Javier Milei’s Radical Plan to Transform Argentina.”

Time, Time, 23 May 2024, time.com/6980600/javier-milei-argentina-interview/. https://news.gallup.com/poll/654089/javier-milei-argentina-charts.aspx

Dhojnacki. “Milei’s First Year Ends with Optimism. Can Argentina’s Momentum Continue in 2025?” Atlantic Council, 24 Dec. 2024, www.atlanticcouncil.org/blogs/new-atlanticist/mileis-first-year-ends-with-optimism-can-argentinas-momentum-continue-in-2025/.