First 100 Days: Milei Falters On Shock Therapy For Argentina’s Economy

economy, but it’s a narrow one”.

Analysts were caught by surprise after the government eked out Argentina’s first budget surplus in 12 years at the start of 2024. That was achieved by reducing payments to provinces, freezing budgets and not matching social spending fully for inflation.

Waiting game
According to Eduardo Barcesat, a professor of law at the University of Buenos Aires, Milei’s choice to attack the governors could backfire. “By taking a confrontational stance with governors, he’s made his position even weaker in Congress, especially with centrist legislators.”

Over the coming months, “the president will hope to galvanise support around his policies”, Barcesat said. “If shock therapy takes off and delivers results, especially around inflation, he believes he can increase support,” he said. “So far, this hasn’t been remotely achieved.”

Inflation rocketed to 276 percent in February, principally due to recent peso depreciations. Elsewhere, the poverty rate hit 57.4 percent in January, its highest in 20 years. Rising tensions among workers and unions have provoked high numbers of strikes and protests in recent weeks.

For Matias Vernengo, the former central bank official, “Milei is taking a huge gamble with the Argentinian people. If he doesn’t deliver results soon, I think that protests will start to turn violent. Things could get ugly.”