Javier Milei, the chainsaw-wielding libertarian economist-turned-president, had warned Argentines to brace for pain before relief. So far, he’s been right. He said anything under 15% monthly inflation would be a win — and in that sense, February delivered. But zoom out a bit and the picture gets murkier. The annual inflation rate? A scorching 276%. Not exactly something you slap on a campaign poster.
Since taking office in December, Milei has gone full-throttle with shock therapy: slashing government spending, deregulating markets, and putting populist subsidies on the chopping block. It’s a strategy straight from the IMF playbook — and unsurprisingly, the IMF is applauding. Argentina even posted a budget surplus for the first time in over a decade. That’s the good news.
Now the bad news: the average Argentine is getting crushed. Consumer spending dropped 13.4% year-over-year, food prices have exploded, and poverty is spreading fast. For many, “austerity” isn’t just a policy — it’s a daily reality.
Even the IMF, never shy about pushing belt-tightening, is publicly urging caution. Gita Gopinath, their deputy managing director, praised Milei’s economic direction but emphasized the need to protect the most vulnerable. Without a social safety net, the fallout could get ugly — fast.
Meanwhile, the Central Bank cut interest rates to 80% (yes, cut to 80%) — signaling confidence, or at least hope, that inflation is trending in the right direction. Still, Milei himself warned that March could be a rough one, with early signs pointing to slowing production and shrinking demand.
So where does this leave Argentina? The numbers suggest progress, but the streets tell a different story. Milei’s bet is that short-term pain will lead to long-term gain. Whether that gamble pays off — or blows up — remains to be seen. For now, inflation may be cooling, but the political and social heat is just getting started.