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www.cfr.org

Argentina’s Struggle for Stability

Argentina has struggled with political dysfunction and financial crises for decades. How is the country faring under firebrand President Javier Milei?
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“… Libertarian Javier Milei’s 2023 victory underscored the depth of the grieta, signaling a rejection of the Peronist establishment and the broader political elite. Milei, known by the nickname “El Loco” (“The Crazy One”), presented himself as an outsider promising drastic economic and political change. Railing against big government, he slashed the number of government ministries by almost half and has curbed the central bank’s functions, including by halting the printing of money to fund government deficits. He opposes abortion and mandatory vaccination, is skeptical of climate change, and supports drug legalization and deregulation of firearm ownership. In August 2025, Milei and his administration came under heightened scrutiny after a corruption scandal implicated his sister and other close associates—this was followed by an unexpected defeat in legislative elections in Buenos Aires, Argentina’s biggest province….

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… According to World Bank data, more than half of Argentina’s GDP comes from the services sector, including tourism, with manufacturing industries such as automotives, pharmaceuticals, and chemicals making up 15 percent of GDP. Agribusiness, which makes up 6 percent of GDP, still drives much of Argentina’s exports. The country also sits on some of the world’s largest shale oil and gas reserves, though the government is increasingly looking to harness renewable energy. In addition, Argentina comprises roughly a fifth of South America’s so-called Lithium Triangle, which contains about half of the world’s known deposits of lithium, an element essential in the production of batteries. …”
 
nycfan said:
IMG_0412.jpeg

www.cfr.org

Argentina’s Struggle for Stability

Argentina has struggled with political dysfunction and financial crises for decades. How is the country faring under firebrand President Javier Milei?
www.cfr.org www.cfr.org

“… Libertarian Javier Milei’s 2023 victory underscored the depth of the grieta, signaling a rejection of the Peronist establishment and the broader political elite. Milei, known by the nickname “El Loco” (“The Crazy One”), presented himself as an outsider promising drastic economic and political change. Railing against big government, he slashed the number of government ministries by almost half and has curbed the central bank’s functions, including by halting the printing of money to fund government deficits. He opposes abortion and mandatory vaccination, is skeptical of climate change, and supports drug legalization and deregulation of firearm ownership. In August 2025, Milei and his administration came under heightened scrutiny after a corruption scandal implicated his sister and other close associates—this was followed by an unexpected defeat in legislative elections in Buenos Aires, Argentina’s biggest province….

IMG_0413.jpeg

… According to World Bank data, more than half of Argentina’s GDP comes from the services sector, including tourism, with manufacturing industries such as automotives, pharmaceuticals, and chemicals making up 15 percent of GDP. Agribusiness, which makes up 6 percent of GDP, still drives much of Argentina’s exports. The country also sits on some of the world’s largest shale oil and gas reserves, though the government is increasingly looking to harness renewable energy. In addition, Argentina comprises roughly a fifth of South America’s so-called Lithium Triangle, which contains about half of the world’s known deposits of lithium, an element essential in the production of batteries. …”
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“… In January 2025, after making large cuts to public spending, Milei’s government achieved its first budget surplus in over a decade, amounting to 0.3 percent of GDP. However, a hidden “quasi” fiscal deficit at the central bank remains. Inflation, which reached over 140 percent before the 2023 election and accelerated to 211 percent in December 2023, fell to around 33 percent by August 2025.

But Argentina’s economic woes persist. The country’s currency controls, multiple exchange rates, and import barriers have made it harder for international companies to operate in Argentina and created persistent difficulties for domestic firms. Additionally, Argentina is grappling with rising poverty and a burgeoning informal currency market. The rapid reduction in public spending has gutted investment in infrastructure, leading to a down in the construction sector.

After taking office, Milei shelved plans to dollarize the economy and instead prioritized cutting spending and reducing the deficit, earning initial applause from the IMF. However, his administration has been slow to rebuild Argentina’s reserves, and the combination of inflation inertia and a crawling peg—an exchange rate regime that allows a fixed exchange rate to fluctuate between a specified range—led the inflation-adjusted value of the peso to rise. Argentina’s fiscal success was rewarded with a new IMF loan package in April 2025, which provided Buenos Aires with an immediate influx of $12 billion. But these funds didn’t catalyze a turn around in Argentina’s balance of payments, as the country continued to draw on its reserves and developed a current account deficit. …”
 
Background 2023:

markets.businessinsider.com

The 'blue dollar' is booming: Argentina's lust for the buck pushed its black-market rate up 60,000% since peso parity ended in 2002

On Argentina's forex black market, the dollar recently topped 1,000 pesos for the first time. The unofficial exchange rate is up almost 60,000% since 2002.
markets.businessinsider.com markets.businessinsider.com

“… In Argentina's bustling black market for foreign currencies, the dollar is far dearer. US currency bills are much sought after by residents as a means to protect their savings, which risk losing value by the day if held in the hapless local currency. Argentines have stashed away billions of cash dollars in their cupboards and under mattresses, according to some estimates.

The coveted bucks from the back alleys of Buenos Aires have their own price, even their own name: dólar blue, or the "blue dollar."

And they are always in demand, no matter the cost.

… Argentines had hoarded about $246 billion in undeclared cash, overseas bank accounts, and safe-deposit boxes at the end of 2022, the American libertarian think tank Cato Institute said in a blog post last month, citing figures from Argentina's statistics agency. Local media also have reported similar figures.

That's almost 12 times the country's official foreign-currency reserves, and equivalent to about 40% of GDP. …”
 
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