With today’s legislative elections, Argentina is debating whether the changes promoted by President Javier Milei represent a real recovery or an economic mirage sustained by drastic adjustments, external support, and an exhausted society.
Less than two years after taking office, Javier Milei faces his first major test of fire following the expected defeat in the local elections in Buenos Aires last September, in a territory traditionally held by the left.
This Sunday’s legislative elections will not only determine the balance of power in the Argentine Congress, but many interpret them as a “plebiscite” on the economic and political direction of the libertarian government.
With inflation declining, an unprecedented fiscal surplus, and the explicit support of Washington and the International Monetary Fund (IMF), the Argentine president defends his administration as an “economic miracle.” However, the social consequences of the austerity measures and the corruption scandals surrounding his inner circle cast a shadow over that triumphalist narrative.
Argentina’s economy under President Milei: The lights and shadows of the ‘miracle’
Official figures give Milei arguments to claim that his plan is working. According to the National Institute of Statistics and Censuses (INDEC), annual inflation, which in December 2023 was close to 211%, fell to 34% in August of this year. It is a drastic reduction that has brought back a certain sense of stability to a population that for years lived constantly checking supermarket prices.
“That drop has a strong psychological component. People feel that, for the first time in a long while, their money isn’t evaporating every month,” explains Argentine economist and professor Javier Langreo, consulted by ColombiaOne.
The decline in inflation has also had a direct effect on poverty rates: from 53% recorded in the first half of 2024, the figure dropped to 32% a year later. However, critics warn that “this statistical improvement does not necessarily reflect a real improvement in quality of life, since wages remain stagnant and household consumption continues to be depressed.”
Gross domestic product growth also generates mixed interpretations. The Organisation for Economic Co-operation and Development (OECD) forecasts an expansion of 5.2% in 2025, but analysts point out that it is a “rebound effect” after two years of economic contraction (-1.6% in 2024 and -1.7% in 2023). Argentina, a cyclical economy by definition, remains trapped between brief growth peaks and recurring crises.
Milei’s chainsaw: austerity and surplus
The most recognizable symbol of Milei’s government — the chainsaw — has become a metaphor for his economic policy: aggressive cuts in public spending, elimination of subsidies, and reduction of the state structure. With these measures, the administration achieved a fiscal surplus in record time.
“Building a sustainable fiscal anchor and abandoning expansionary monetary policy was essential to stabilize the country,” says Langreo. What seems evident is that stopping the printing of money to finance the deficit has halted the spiral of underdevelopment, and the rebound effect is pushing macroeconomic indicators upward. But what the Argentine government cannot hide is that the social costs are enormous.
To reach that surplus, Milei implemented cuts that particularly hit the middle and lower classes. Pensions absorbed 19% of the reduction in public spending, according to the Center for the Study of Argentine Economy and Policy (CEPA). They were followed by 13% cuts in social benefits, 25% in transportation subsidies, and nearly half in energy assistance.
In public hospitals, the consequences are tangible. The Garrahan, a flagship of pediatric care in Buenos Aires, has become a symbol of protests over the lack of resources. In this context, the strong macroeconomic figures — which are undeniable — are being built upon a deterioration in the conditions of hospitals, schools, and retirement pensions, which represents a huge impact on the population, especially the most vulnerable.
Liberalization and deregulation: between efficiency and neglect
Another pillar of Javier Milei’s program is deregulation. The president has promoted decrees that eliminate controls and administrative obstacles to “liberate the forces of the market.”
On the surface, cutting bureaucracy and simplifying processes seems positive, but it is also true that indiscriminate openness can destroy local productive structures if it is not accompanied by transition policies — something that, for now, is not happening in Argentina.
Indeed, liberalization has benefited major agricultural and mining exporters, while thousands of small businesses — lacking access to credit and unable to compete with imported products — have shut down. Between 2023 and 2025, around 118,000 jobs disappeared, and the country lost about 2% of its business fabric.
Local economists point out that private investment is not taking off because domestic consumption is paralyzed. Thus, despite the changes, Argentines remain in debt and without purchasing power. “As long as there is no demand, there will be no productive expansion,” explains economist Langreo.
Reallocating subsidies in Argentina: Fewer intermediaries, more control
One of the least visible but most profound reforms of the libertarian government has been the change in the distribution of social aid. Milei eliminated intermediaries such as unions and “piquetero” organizations, channeling subsidies directly to beneficiaries.
The president presents it as a victory against “the political mafia.” His critics, however, denounce it as an attempt to weaken social movements and concentrate state control.
The platform Chequeado, which monitors presidential promises, notes that out of the 20 most relevant ones, Milei has fully fulfilled two, maintains 10 in advanced progress, four delayed, and four unfulfilled. “He is one of the presidents with the highest level of promise fulfillment, although many of them carry a high social cost,” says Matias di Santi, the outlet’s director.
A miracle sustained from abroad
Argentina’s financial balance relies, to a large extent, on international aid. To stabilize the peso against the dollar — and keep inflation under control — the government has intervened in the foreign exchange market by purchasing pesos and using dollar reserves. According to analysts, the Argentine currency is overvalued by between 20% and 30%.
When Milei took office, one dollar traded for 360 pesos; today, it hovers around 1,348. However, the president has managed to prevent a deeper devaluation thanks to external support.
The United States, a political and financial ally of the libertarian government, announced in September a US$20 billion package to strengthen Argentina’s reserves. “That backing calmed the markets and reduced the country’s risk,” says Langreo. Days later, U.S. Treasury Secretary Scott Bessent confirmed the purchase of Argentine pesos to ensure liquidity in the South American country’s financial system.
The IMF has also played a key role. In April, it approved a US$20 billion, four-year package. Milei, who had harshly criticized the fund during his campaign, now maintains a fluid relationship with its director, Kristalina Georgieva, who went so far as to say that this could be “the IMF’s last program with Argentina, if the country manages to consolidate its stability.”
Corruption and political isolation less than two years after the elections
Despite the economic progress, corruption scandals have eroded the president’s image. The first erupted when Milei promoted a cryptocurrency on his social media that later collapsed, causing huge losses for small investors. The judiciary is investigating whether there was market manipulation.
Another case involves Karina Milei, the president’s sister and secretary general of the presidency. Some recordings — not independently verified — implicate officials from the National Disability Agency in a bribery scheme that mentions her. The government denies it.
The third hit his party directly: José Luis Espert, the main candidate in the legislative elections, resigned after admitting he had received US$200,000 from a businessman under investigation for drug trafficking in the United States.
Adding to these problems is the president’s political isolation. Milei has burned bridges with allied governors and maintains a tense relationship with Congress. For political analysts, “his lack of skill in dialogue could doom his reforms,” even if the macroeconomic figures look good.
Related: Surprise Victory for President Javier Milei in Argentina’s Legislative Elections.
Argentina, between relief and fatigue: a society in suspension
In the streets of Buenos Aires, opinions are divided. Part of the population values exchange rate stability and a sense of fiscal order. Another, broader segment in working-class neighborhoods, perceives a deterioration in purchasing power and a decline in public services.
“We live in a country with less inflation, but also with less employment, less public works, and less hope,” summarizes Mariela, a retired teacher from the Flores neighborhood. In contrast, Lucas, a tech entrepreneur, celebrates the reforms: “At last, someone dared to do what no one else would. The country needed surgery of this kind.”
That polarization is, at its core, what will define the results this Sunday, Oct. 26. Economists consulted agree that the libertarian experiment cannot yet be fully evaluated. The figures show clear progress in inflation and public finances, but also a social and productive setback.
“The old political system is decomposing, but we still don’t know what will replace it,” summarizes Langreo. “Milei has begun a process of dismantling the traditional state model, although the country has not yet found a new balance.”
The October legislative elections will determine whether Argentines grant him more time to consolidate his model or choose to set limits on his radical experiment. In the meantime, the country continues to waver between the promise of a miracle and the fear of collapse.
Related: Argentina’s Foreign Minister Resigns Amid Disagreements with Milei.