Two Years of Milei: The Reform Agenda Moves Forward in Argentina
Today marks two years since Javier Milei took office as president of Argentina. Since December 10, 2023, the first self-described libertarian to ever rise to power began to liberalize Argentina’s economy. Unsurprisingly for other libertarians, Milei’s policies have started to reverse the country’s long-standing decline.
As of September, the economy is growing at 5 percent on a yearly basis. Poverty, which exceeded 40 percent before Milei took office and peaked at 52.9 percent in the first half of 2024, is now down to 31.6 percent. Monthly inflation, which often surpassed 10 percent in the pre-Milei era and reached 25 percent in December 2023, now hovers around 2 percent. Both exports and imports are rising rapidly.
But how did these results come about? One of the first measures he took was to balance the budget immediately upon taking office. Since the deficit stood at 4.6 percent of the GDP in 2023, this policy was considered so radical that his opponents said it was impossible to carry out. Yet Argentina posted an impressive 0.3 percent surplus in 2024 and has maintained a balanced budget since then. This fiscal “anchor,” brought about by an astounding 30 percent in real spending cuts, has played the key role in ensuring that inflation comes down. However, fiscal consolidation has also left room for some tax cuts, the latest being a reduction in export taxes, which was announced yesterday.
Argentina has also embarked on a deregulation push, which is yielding impressive results, despite fierce opposition from Congress and special interests. For example, my colleague Ryan Bourne and I documented how the rental housing supply in the city of Buenos Aires surged by 212 percent and real prices fell by 27 percent barely seven months after Milei repealed rent control. However, daily life has also improved in many other respects as a result of various deregulatory policies, which range from opening up the satellite internet market—and thus providing Argentina’s countryside with much-needed internet access—to eliminating various restrictions and controls on imports, resulting in increased options for consumers.
So what’s next in Argentina? Today marks not only two years since Milei took office, but also the day when Congress changes its composition following the October midterm election. Two months after Milei’s resounding victory in the midterms, the president’s party, La Libertad Avanza, has now officially become the largest party in the House and the second largest in the Senate. When Milei took office, his party commanded less than 15 percent of all seats, whereas it will now be around 35 percent. In the context of a divided opposition, this will put the president closer to securing majorities for his legislative agenda, and it goes a long way to neutralize Peronist legislative threats.
With momentum on Milei’s side, the government has already called for special sessions in Congress for its new members to vote on labor, tax, and criminal justice reform bills before the end of the year. (Their content is not public at the time of writing.) At various points, the president has also hinted at other legislative goals, including the privatization of major state-owned enterprises, pension reform that allows for private retirement plans, the liberalization of education, and further deregulation of the economy, among others. Milei previously tried to pass some of these policies in Congress but was defeated.
A key reform that is still part of Argentina’s unfinished agenda is dollarization, something that Milei advocated during the 2023 presidential campaign. To the extent that the country maintains its Central Bank, a major source of instability will remain, potentially imperiling the rest of the reforms. This is especially so if the Peronists or their allies regain more power, as will undoubtedly be the case at some point in the future. After almost a century of high inflation, Milei could be remembered as the president who finally brought stability to Argentina. The sooner he dollarizes, the better.