Argentina recorded an annual inflation rate of 31.5% in December 2025 — the lowest year-end figure since 2017. Monthly prices rose 2.8%. In a country that was running at 211% annual inflation in late 2023, this represents a macroeconomic shift of extraordinary speed and scale.
Javier Milei was elected president of Argentina in November 2023 on a platform that most of the international economics establishment dismissed as lunatic: abolishing the central bank, dollarising the economy, cutting government spending by 30% immediately, and eliminating entire ministries. The chainsaw was both his metaphor and his campaign prop.
He has not done all of it. But he has done enough to produce results that the establishment told him were impossible.
What Actually Happened
The Milei government eliminated Argentina's chronic fiscal deficit — for the first time in decades — through a combination of spending cuts that were genuinely brutal and revenue measures that were aggressive. The central bank stopped printing money to cover government spending. The parallel exchange rate, which had been running at double or triple the official rate, converged toward the official rate as confidence in the monetary regime improved.
The cost was real and immediate. The poorest Argentines — those most dependent on state subsidies — were hit hardest in the short term. Real wages fell. Poverty rose, initially, before beginning to recover as the economy stabilised.
This is always the argument against structural adjustment: the pain is immediate and falls on those least able to absorb it, while the benefits are delayed and diffuse. It is a legitimate argument. I take it seriously.
But the counter-argument is also serious: the alternative — the decades of inflationary populism that preceded Milei — also hurt the poorest Argentines, consistently, year after year, by destroying the value of their savings and their wages in a different but equally devastating way.
There is no painless version of fixing what Argentina had broken. The question is which pain you choose and how quickly you get through it.
What This Means for the Investment Case
I have written about Argentina before with significant caution. I still have that caution. Argentina has defaulted on its sovereign debt nine times. Its legal and regulatory environment has been hostile to foreign investment for decades. Property rights, while improving, are not reliably protected.
But the Milei experiment has changed the investment calculation in ways that are worth noting.
The parallel exchange rate convergence means that dollar-denominated assets in Argentina are no longer being systematically destroyed by the gap between official and black market rates. The fiscal consolidation means that the monetary system is no longer being undermined from within. The reform of the labour market and the reduction of regulatory burden make it easier to run a business.
For investors with a long time horizon, a high risk tolerance, and genuine local knowledge and relationships, Argentina is more interesting now than it has been in twenty years.
For everyone else, it is a situation worth watching rather than entering.
The Broader Lesson
Milei's experiment is being watched by economic liberals everywhere because it is the most ambitious real-world test of a proposition that is easy to argue in theory but rare in practice: that a government can rapidly and dramatically reduce its size and the economy can survive, and eventually thrive.
The evidence, seventeen months in, is more positive than the critics predicted. It is also less complete than the advocates claim.
The lesson I take is not that Milei was right about everything. It is that the apparent impossibility of structural reform is often a political impossibility, not an economic one. When the political conditions exist for genuine change, change can happen faster than anyone expected.
That lesson applies well beyond Argentina.
Work with Sebastian
If Argentina is on your radar — as an investment, as a residency option, as a second passport route — let's make sure you are going in with an accurate picture of the current situation and the structural risks that remain. Book a consultation.