Today marks exactly one year since Javier Millay became President of Argentina. Expectations were high among libertarians, as it was the first time a self-proclaimed “anarcho-capitalist” had been elected to the world’s highest office. In its first year of existence, Argentina has definitely experienced changes. The country is not an anarcho-capitalist paradise, but it certainly has less regulation and a more austere government than before.
Indeed, it was unexpected that Argentina was working so hard to balance its budget. Millais inherited a deficit of 5% of GDP, but achieved a budget surplus in the first quarter of his administration and has maintained it ever since. The spending cuts primarily target pensioners and civil servants, and some are questioning their sustainability. But rebalancing the budget so quickly in a country that has been out of balance for 113 of the past 123 years is by far Millais’ greatest achievement.
Money printing was abruptly halted, and expectations that Argentina would maintain its current fiscal policy caused a strong peso (after years of weakness) and a sharp fall in inflation. Monthly inflation was 25% in December last year, compared to 2.7% in October, the latest available figure. This was the lowest monthly reading since November 2021, although the government is aiming for a sharp decline in future inflation. Through 2023, Argentina’s inflation rate was 211%, the highest in the world and the highest since the hyperinflation of 1989-1990. All of this seems like history now. The country has stabilized.
At the same time, Millay created a new Ministry of Deregulation, tasked with deregulating Argentina’s economy as much as possible. The government has already implemented several measures, using executive orders and special powers delegated by Congress, to introduce competition into previously closed markets. Examples range from rent control, which nearly tripled the supply of available apartments and caused real prices to fall by 40%, to the approval of new satellite internet companies, the introduction of which has boosted agriculture. A revolution is expected to occur. Use of technology. Argentina currently ranks 148th in regulation, according to the Fraser Institute’s Global Economic Freedom Index.
So what about things other than economic policy? Argentina’s first liberal president has not made any major changes when it comes to personal freedoms, but the country already ranks relatively high there, according to the Cato Institute’s human rights index. Instead, state-run media outlets stopped broadcasting left-wing propaganda, and Millais’s government shut down anti-discrimination agencies on the grounds that they were being misused for political purposes.
Of course, countless challenges remain for Millay. Although the government has begun providing grants for projects over $200 million, exchange controls remain in effect and Argentina is unlikely to receive large investments as long as they are in place. Even though Mr. Millei has reduced some tariffs, Argentina is still a long way from trade liberalization. So far, state-owned enterprises have not been privatized and taxes remain as high as they were when Mr. Millais took office. However, the government is aware of all these challenges and is likely to attempt reforms at some point, perhaps after the 2025 midterm elections. Without these reforms, it will be difficult to sustainably reduce poverty, which currently stands at 53%.
Despite implementing perhaps the largest fiscal adjustment in Argentina’s history, Millay not only remains popular, but appears to be becoming more popular as time goes on. According to the latest poll by the University of San Andres, 54% of Argentines view him favorably. He also has the market’s confidence, which is why Argentina’s sovereign risk premium fell by almost two-thirds in 2024, to its lowest level in five years.
Ironically, many expected Millais’s power to last only a few months, or even a few weeks. Sérgio Massa, his main opponent in the 2023 presidential election, was so convinced that Millais would fail that he wrote a book to correct himself, scheduled to be published in March. However, as Millais’ popularity continued, the release was postponed every month. At this rate, that book may never see the light of day again.
Marcos Falcone is a project manager at Fundación Libertad and a regular contributor to Forbes Argentina. His work has also appeared in The Washington Post, National Review, Reason, and elsewhere. He is based in Buenos Aires, Argentina.
