Milei's Chainsaw Economy: Successes And Backlash

Javier Milei came to power promising a dramatic overhaul of Argentina’s economy — and on paper he has delivered. Inflation, once dragging at more than 200% a year, has fallen to around the mid-30s; the government has reported its first fiscal surplus in 14 years; and foreign capital, briefly at least, returned. But those headline wins sit beside harsh realities on the ground. Streets have filled with angry protesters. Police have used tear gas, rubber bullets and water cannon. Factories and farms report closures and job cuts. For many ordinary Argentines, pay cheques and public services feel thinner, not better. Milei’s approach has been unapologetically radical. He slashed the size of government, halved ministries, axed tens of thousands of public sector posts and cut budgets for health, education and pensions. Energy and transport subsidies were withdrawn, sending bills higher. He removed price supports and opened the door to cheaper imports by cutting tariffs. In one dramatic move he devalued the peso by roughly half — a shock that pushed inflation up before it later eased as demand fell. The reforms won enthusiastic nods abroad. Investors liked the fiscal discipline. Washington arranged a swap of about $20bn into pesos — a bolstering that stabilised markets and lifted the peso and Argentine bonds. US President Donald Trump has praised Milei and the two are due to meet in Washington. But the domestic fallout has been painful. A yerba mate grower in Misiones says deregulation collapsed prices below production costs and forced him to lay off staff. The textile sector reports thousands of lost jobs as cheaper imports flood the market. Critics point out that cuts landed heavily on pensions, hospitals and schools — not the wealthy figures Milei railed against during his campaign. Political trouble has followed economic turbulence. Milei’s party suffered a heavy defeat in Buenos Aires province in September, provoking a sell-off of pesos and bonds and a surge in market nervousness. With midterm elections looming on 26 October and large debt repayments due next year, there is little room for error. The story raises a wider question: can shock economics survive without political consent? Some supporters argue the short-term pain is the price of long-term stability and lower taxes. Others warn that if the public loses faith, any financial gains could evaporate — and social unrest might reverse the gains altogether. For now Argentina sits at a crossroads. The numbers suggest a textbook fiscal turnaround. But everyday Argentines are still counting the true cost. How voters respond at the ballot box will determine whether Milei’s experiment becomes a durable model — or a cautionary tale. --- Managing your business finances? TaxAce provides smart online accountancy services for UK businesses with flexible monthly plans. Image and reporting: https://www.bbc.co.uk | Read original article