Liberal media and gurus have highlighted that the Argentine economy is emerging from recession, one year after the chainsaw candidate came to power. Behind greater stability than expected, falling inflation and the fiscal surplus, salaries have deteriorated, the State is regressing in science and education, retirements are on the floor and, once again, a right-wing government is negotiating a loan with the International Monetary Fund (IMF).
The ultra-president Javier Milei celebrates in style the downward trend in inflation registered in recent months, after having reached 25.5% in December 2023 as a result of the devaluation that he himself decided. If in May it was 4.2%, in November it was 2.4%, according to official figures from the National Institute of Statistics and Census (Indec). Interannual inflation reached 166%, while the accumulated inflation so far this year was 112%.
“Like any policy of shock, The index started at 25.5 as a result of the great devaluation of 118%, and then the path has been downward. Both the Government of Alberto Fernández (center-left Peronism) and that of Mauricio Macri (conservative) took several years to reach that level of accumulated inflation,” Guido Agostinelli, economist and author of the book, tells elDiario.es Libertarian experiment.
Salaries and pensions
The expert is skeptical of the economic success claimed by an Executive who has “done his homework with the markets.” “A central fact is the deterioration of income: the registered salary fell by 4% in the private sector, 20% in the public sector, the minimum wage by 30% and retirement fell by 13%. The Government has already said that in 2025 it will not approve salary increases above 1% monthly. There’s nothing libertarian about that. Furthermore, registered unemployment in the third quarter stands at 6.9%, when under Alberto Fernández it was 5.7%,” he says.
Milei had promised that “the largest adjustment in history” would be paid exclusively by “the caste.” However, the chainsaw took its toll on universities, scientists, pensioners and workers. Of the four points of GDP that it cut in public spending, 28% corresponds to retirements, as Pablo Tigani, master in International Economic Policy, explains to elDiario.es. In 2024, investment in public education fell 40% compared to 2023. In addition, the president vetoed an increase in the budget of universities.
The devout Austrian School economist has received praise from US President-elect Donald Trump, whose government efficiency gurus, Elon Musk and Vivek Ramaswamy, They seem willing to replicate their budget cuts in the United States.
The IMF again?
The IMF, which approved a bailout for Argentina in 2018 during Macri’s government, the largest in the organization’s history, expects the country’s economy to contract by 3.5% overall this year, after a contraction of 1.6 % last year. At the same time, the Fund highlights Argentina’s “impressive results” in implementing its economic stabilization program, including the reduction of inflation and fiscal surplus.
Days ago, the international organization confirmed that there are ongoing negotiations for a new agreement with Argentina. The new program must contemplate the refinancing of the 44,000 million dollars coming from the stand by that Macri signed in 2018, which was redefined in 2022 and then adjusted in January of this year after Milei came to power. The current Extended Facilities program, signed in March 2022, expires at the end of 2024.
Pablo Tigani believes that the Milei Executive does marketing and misinforms ordinary citizens about economic reality. “If there is no fiscal deficit and it is not being issued, then why are they negotiating a loan with the Fund again? Because they do carry tradefinancial bicycle. It is not a crime, but in Argentina it represents an enormous injustice,” he tells elDiario.es.
The “financial bicycle” or carry trade It is a mechanism in which companies and savers exchange dollars for pesos, invest those pesos in instruments that offer high interest rates, and then buy dollars again, taking advantage of the yield differential. “In 2024, those who bet on this operation won a minimum of 50% and those who bought inflation-adjustable instruments up to 90%,” adds the expert.
In all of this, the Argentine economy received a stroke of fortune: the result of money laundering, with which 23 billion dollars entered the legal circuit in two months.
Agostinelli points out that the feeling of encouraging climate is caused by the exchange rate lag, which refers to when the price of goods and services of an economy is behind with respect to a group of countries with which commercial transactions are carried out. “This Government falls in love with the exchange rate delay, which generates an anchor effect on prices.” And you still need US currency. “In 2025, 20 billion of the debt matures; dollars are required to import, also given the tourism gap because fewer tourists are received, that is where the new negotiation with the IMF comes in,” says the economist.
The number of foreigners who visited Argentina last November fell 29.2% year-on-year, up to 855,000 people, according to a latest report from the National Institute of Statistics and Censuses (Indec). The drop in figures is related to an exchange rate that is no longer favorable for foreigners as it was in 2023.
Faced with a new loan request, the international credit organization is likely to impose a central condition: the opening of the “stock” (an exchange restriction that prevents free capital flows and contains the outflow of reserves from the Central Bank). “How high will the dollar rise when the exchange market is freed? “It is unexplored territory,” says economist Agostinelli.
Apparently, the ultraliberal Government would maintain the exchange rate delay with stocks until the legislative elections in October 2025.
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