Milei’s chainsaw stops. The “miracle” becomes “ghost” of 2001

Rise the interest rates; They go down the reserves. President of Argentina is increasingly having difficulty maintaining its budget adjustment.

Just a year ago, the Argentine president Javier Milei enthusiastically proclaimed the “Economic miracle” da Argentina Faced with international entrepreneurs, displaying promising numbers and a fiscal surplus that, according to itself, demonstrated the effectiveness of its budget adjustment.

Inflation, which in January 2024 exceeded 20%a month, seemed to come down to the 5%, and the economy had intertrimetral growth close to 4%after a negative first trimester.

However, what was then source of celebration now faces a more complex and worrying reality. That is, the “economic miracle of Argentina threatens to end in a nightmare”, resume o.

The far-right government inherited a country with The devalued currency, a weakened central bank and uncontrolled inflation levels.

Milei’s strategy consisted of liberalizing the exchange rate, imposing a strong fiscal adjustment and suspending monetary emission, accompanied by an aggressive political campaign against “caste” and public bureaucracy.

The first results enthusiastic about markets: the country risk fell from 2,500 points in 2023 to 500 in January 2025, and financial liberalization and tax reduction measures generated sustained economic growth expectations.

However, the economic model quickly showed its Limitations. Weight overvaluation required aThe constant entry of dollars to support the exchange rate.

Initially, the government got $ 42 billion through a fiscal agreement and loans from the International Monetary Fund, but access to international credit remained limited.

In April this year, the elimination of currency control caused a massive purchase of dollars by citizens and led the government to apply an extreme monetary adjustment: increased the requirements of bank reserves up to 53% and offered interest of up to 80% in weights, measures that stopped economic activity and endeavored funding to companies.

In recent days, the Argentine weight has suffered strong pressure. Argentines are losing confidence in the government. So they are buying dollars – and the USA have already repeated that they will help. US Treasury Secretary Scott Bessent is available to help Argentina control turbulence in the currency market. “Trump gives Milei a space to breathe,” writes the.

A economic stagnation It is reflected in recent indicators. GDP grew 6% in homologous terms in the second quarter of 2025, but fell 0.1% over the previous quarter. Family consumption has decreased by 1.1%, and the average current account advance rates reached almost 50%, generating a financing over $ 100 million for companies. Analysts warn that if this trend is maintained, the economy may recession in the second half of the year.

O discontent of citizens is also reflected in the electoral sphere. In recent legislative elections in Buenos Aires province, Milei suffered a significant defeat, being almost 14 points behind Peronism. Factors such as allegations of corruption involving family members of the president, political management errors and, above all, deteriorating the economic situation explain much of this result.

The population faces a Double Challenge: Inflation has moderated, but income does not allow to cover basic expenses or maintain the previous living level. The increase in public service rates and school bribes, along with the elimination of subsidies, particularly affected the middle class. Loss of employment focuses on key sectors such as construction and industry, which since the arrival of Milei have destroyed more than 116,000 jobs. Labor precariousness and pluri -preprene increased, reflecting the tension between price stability and yield insufficiency.

Milei’s government is now focused on elections National Legislative of October 26. His party, La Libertad Avanza, needs to increase his representation in Congress to advance with the promised structural reforms. To this end, it resorts to the fear of the return of kirchnerism and the risk of economic calamities, trying to justify market shaking as a result of the “Kuka risk” and not of its own errors in economic management.

Experts warn that without a constant flow of dollars and without sustainable measures to stimulate production and consumption, Milei’s “economic miracle” risks becoming a risk of becoming a crisis comparable to what lived in Argentina in 2001, when a model based on indebtedness and monetary convertibility ended in the collapse Financial and social of the country.