Milei’s record, part one: the Argentina he took over

Javier Milei took office in December 2023 with inflation above 160%, negative reserves and a State financed by printing money.

Author: Cláudia Ascensão Nunes

Published: October 18, 2026

Milei’s record, part one: the Argentina he took over

Javier Milei has been president of Argentina for almost three years. To judge his record, we first need to know where he started. This first part looks at the economy he inherited, the political weakness with which he took office and the programme he promised.

The crisis Milei inherited was the product of decades of state control over the economy. Governments spent more than they collected, covered the gap by printing money and then tried to contain the consequences with price and currency controls. Each round of controls deepened the crisis it was meant to solve.

A crisis decades in the making

Argentina has a long history of monetary and fiscal crises, and almost all of them share the same origin: the state spends more than it collects and covers the gap with debt or with money printed by the central bank. In 1990, after years of deficits financed this way, annual inflation reached 1,344% [1]. Three decades later, the pattern remained. Governments kept borrowing until creditors lost confidence and, in May 2020, the country defaulted on its sovereign debt for the ninth time in its history [2].

When these policies drove the peso down, governments responded with currency controls that restricted the purchase of dollars. In 2011, argentines were swapping their savings for dollars to protect themselves from inflation, and the central bank was losing reserves selling them. In October that year, to stop this outflow and avoid a devaluation, Cristina Fernández de Kirchner’s government imposed the ‘cepo’, as these controls became known: every purchase of dollars now required approval from the tax authority [3][4]. The controls ended up weakening the peso, as demand for dollars moved to the illegal parallel market. There, the ‘blue’ dollar, as Argentines call that market’s rate, was worth around 4.50 pesos when the cepo came into force and passed 10 pesos by October 2013. Meanwhile, the central bank’s reserves kept falling [3].

Peronist presidents governed for 16 of the 20 years before Milei’s election: Néstor Kirchner, Cristina Fernández de Kirchner and Alberto Fernández.

The one exception was the centre-right government of Mauricio Macri, from 2015 to 2019. Macri saw the cepo as a brake on the whole economy: exporters were delaying sales because the official exchange rate paid them few pesos for each dollar; manufacturers struggled to buy the dollars they needed to import parts and raw materials; investors kept their money abroad; and the central bank was draining its reserves to prop up the peso. Eight days after taking office, Macri’s government lifted the currency controls, with the stated aim of reviving exports and restoring investor confidence [5]. To keep political support, however, his government held off on substantial cuts to the budget deficit and financed it by borrowing abroad [6]. The IMF later concluded that it had avoided sweeping structural reforms, partly because of its fragile position in Congress [7].

That strategy left Argentina exposed. In 2018, rising US interest rates, a central bank that reset its inflation targets and the worst drought in 50 years drove investors away, and the peso lost more than half its value [6]. Macri turned to the IMF for a $57 billion loan, the largest in the Fund’s history [8]. In August 2019, he lost the primary elections to Alberto Fernández, and the peso fell by almost a quarter in three weeks. To stop capital from leaving the country, the government reimposed currency controls on 1 September 2019 [9]. In October, Macri lost the presidential election to Fernández, by 40.28% to 48.24% [10].

Prices were rising at triple-digit rates

Throughout 2023, the Argentine peso lost value fast. The central bank was creating pesos to finance state spending, increasing the amount of money in circulation. With ever more pesos, each buying ever less, prices rose. Many Argentines tried to protect their savings by buying dollars, a more stable currency.

The government, however, kept the official exchange rate artificially low, below the price the dollar fetched on the parallel market. Those unable to buy dollars at the official rate turned to that market, where the US currency was far more expensive. Many businesses still charged in pesos but calculated their prices using the parallel exchange rate, since that was what they would pay for dollars to restock, which fed inflation. At the same time, exporters, who had to sell their dollars at the official rate, delayed sales, while the central bank kept selling cheap dollars to importers. Reserves fell.

In August 2023, Sergio Massa, then economy minister, devalued the peso by 22%, raising the official exchange rate to 350 pesos per dollar. In effect, the government acknowledged that the peso was worth less: more pesos were needed to buy the same amount of dollars. Massa held the official rate at that level until the October elections [11].

Inflation kept accelerating. In November, prices rose by 12.8% in a single month, while annual inflation reached 160.9%. In other words, prices in November 2023 were on average 160.9% higher than in November 2022 [12].

Milei takes over an economy in deep crisis

On 19 November, Javier Milei won the presidential run-off. When he took office on 10 December, he inherited an economy in deep crisis. In its first week, the new government devalued the peso again: the official exchange rate went from around 366 to 800 pesos per dollar. The move cut the official value of the Argentine currency against the dollar and brought the official rate closer to the parallel market rate. At the same time, it made imported goods more expensive and added immediate pressure on prices.

For 2023 as a whole, prices rose by 211.4%, the largest annual increase since 1990 [1]. December’s devaluation contributed to the rise in prices at the end of the year, but inflation had reached triple digits long before Milei came to power.

The crisis went beyond prices. Gross domestic product (GDP), which measures the value of goods and services produced in the country, fell by 1.6% in 2023 [13]. In the second half of the year, 41.7% of the population, more than 19 million people, lived below the poverty line, according to official data [14].

A state financed by the printing press

Behind the inflation was a state that spent far more than it collected. In 2023, the national government ran a primary deficit of 2.9% of GDP. Including interest on its debt, the deficit reached 6.1% of GDP [15].

The central bank covered much of the gap. It lent directly to the Treasury, and it absorbed the pesos it had created by issuing short-term notes, the LELIQ, on which it paid interest of more than 100% a year. By the start of 2024, these interest-bearing liabilities reached about 26 trillion pesos, 2.7 times the entire monetary base. The central bank paid that interest by creating new pesos, which made it the main source of new money in 2023 [16].

The central bank had also run out of dollars. Its gross reserves stood at about $21 billion, but once its dollar debts were subtracted, net reserves were negative by between $11 billion and $12 billion [17]. To protect what was left, the government rationed foreign currency through the cepo, and a parallel market flourished. Just before the devaluation of December 2023, the official dollar cost 366 pesos and the parallel ‘blue’ dollar 1,070 pesos, almost three times as much [18].

Investors drew their conclusions. On the day Milei took office, Argentina’s country risk premium stood at 1,923 basis points, investors demanded about 19 percentage points more interest to lend to Argentina than to the US government [19]. In practice, the government could not borrow on international markets.

A president without a party machine

Milei won the presidency without control of Congress. His party, La Libertad Avanza, founded only two years earlier, held 38 of the 257 seats in the Chamber of Deputies, about 15%, and 7 of the 72 seats in the Senate, about 10% [20]. It had no provincial governors. Every reform that needed a law would depend on votes from other parties.

His mandate at the polls was clear. He won the run-off with 55.65% of the vote, against 44.35% for Massa [21]. In the first round, a month earlier, Massa had come first with 36.68% and Milei second with 29.99% [22].

A chainsaw against the state

Milei campaigned with a chainsaw as his symbol. His programme set out to cut public spending by the equivalent of 15% of GDP and to reduce the number of ministries from 18 to 8 [23]. To end inflation, he aimed to remove its cause, the central bank’s financing of the Treasury, and proposed dollarising the economy and eventually closing the central bank. On taxes and trade, his plan was to abolish most taxes, open the economy to foreign competition and end subsidies to businesses [23].

Argentina voted for the free market

For two decades, Argentina had tried to manage its economy through public spending, money creation and controls. The result was near-hyperinflation, rising poverty and a country shut out of international capital markets. In 2023, a majority of voters chose the opposite approach. The second part of this article will examine how much of that programme Milei has delivered, and whether the free market has achieved what decades of state control could not.