Argentina's Milei shuts up critics with miracle turnaround of economy, strong security policies

President Javier Milei of Argentina continues to stun his critics with an economy that has outperformed expectations and continues along an ambitious path for national security, including pursuit of a NATO global partnership. 

"The fact that you have a president, head of state, who is defending the free market, who is defending the role of entrepreneurs and businessmen as creators of value and just defending deregulation when the tendency in Latin America and much of the West has been to regulate the economy . . . I think that's very positive, not only for Argentina, but for the region as a whole and maybe beyond," Daniel Raisbeck, a policy analyst at the CATO Institute, told Fox News Digital. 

Milei won the presidency in November last year and prompted concern from some in the West that he would lead his country down a road to ruin with libertarian policies that would make an already troubled economy even weaker. Voters wanted economic relief from a market hit with some of the highest inflation in the world. 

Those attitudes have shifted just months later as Milei has enacted a raft of policy changes: The International Monetary Fund (IMF) agreed to release a tranche of loans due to Argentina under a bailout program thanks to Milei’s government managing to create a fiscal surplus in the previous fiscal quarter and bring inflation down. 

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Argentina’s inflation in March alone hit 287%, causing poverty to deepen, and citizens to take to the streets with strikes and protests against his policies. The monthly inflation rate was 25% in December when Milei first took office. 

Milei then went on to significantly reduce spending with major cuts to public-sector wages as he suspended public works projects and cut subsidies. He also devalued the country’s currency by over 50%, which helped it stabilize in value even as the price of basic goods jumped. 

The monthly inflation dropped to 8.8% by April, marking the first single-digit inflation rate in over six months. 

Argentina recorded a $589 million budget surplus in January and continued to post a surplus for each of the first four months of 2024, even as the surplus shrank to $299 million in April, Reuters reported. This marks the country's first quarterly surplus since 2008. 

Raisbeck stressed that Milei’s primary measure of cutting spending has proven highly effective, while arguing that the significant deregulation in other parts of the economy has helped it revive over those first months of the new administration. 

"Argentina was one of the most regulated economies in the world," Raisbeck said. "So when you have a very well-thought-out package like the one that they introduced . . . and you get rid of as many of those regulations as you can, then it's very positive."

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He noted that Milei has not adhered to some of his more aggressive campaign promises, which included a promise to dollarize the economy and shut down the Central Bank, saying that it was a "non-negotiable matter."

Even days after he won the election, Milei appeared to favor more moderate Cabinet members than many would have expected of a man who jolted the international community with his outsider attitude and plans. 

The Wall Street Journal, in December 2023, argued that Milei’s tenure "may turn out to be pretty conventional," with pro-market Economy Minister Luis Caputo leading away from Milei’s more radical plans. 

The promised dollarization has been delayed, and Raisbeck explained that Milei’s approach has relied heavily on using the Central Bank to help regulate the economy, though he argued that Milei’s policies remain libertarian due to the deregulation he has pursued in other areas. 

"Everything related to deregulation is very libertarian, and we’ve seen great success already in the housing market, for instance," Raisbeck said. "So that obviously brought a huge amount of supply that was suppressed because of price controls."

Milei also brought Argentina back to the international foreground, with a stronger focus on national security and changing up the country’s goals from the previous administration – most notably, he rejected the invitation to join the China and Russia-led economic bloc BRICS. 

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Milei argued that it was not "opportune" for Argentina to join the bloc as a full member, according to German outlet DW. However, he will continue to develop ties with its members in the meantime. 

"They have a good security minister, Patricia Bullrich, who has experience because she was a security minister in the previous government," Joseph M. Humire, the executive director of the Center for a Secure Free Society, told Fox News Digital. "She has been able to get the ball rolling very quickly, and I think that was the benefit of having her in that position." 

Humire explained that Milei’s government has largely focused on clearing out external agitators, particularly those connected to Russian disinformation networks, which remain a paramount concern in most parts of the world as Moscow seeks to expand its influence. 

"The external forces are usually the key," Humire said. "Usually, it’s the Russians. The Russians have probably the biggest disinformation networks to be able to amplify local grievances and turn them into this macro instability, and they did that in Colombia, in Chile." 

"A lot of the specifics of the nation’s security has been in mitigating these agitation networks that create chaos throughout the country, and they have been neutralizing some of these threats while they’re studying others," he added. 

The Associated Press contributed to this report.