Last Sunday, October 26, the ruling party in Argentina, La Libertad Avanza (LLA), achieved a significant victory in the legislative elections, through which approximately half of the Chamber of Deputies and a third of the Senate were renewed. LLA was the party with the most votes at the national level, with more than 40% of the votes, which will allow it to double its number of deputies and triple its number of senators. Although it will not have a majority in either chamber, this result reflects strong popular support for President Milei’s management and will allow him to deepen his national project, with an open, decidedly capitalist proposal aligned with the bloc favorable to the United States in its foreign relations.
When Milei came to power, the situation in Argentina was one of crisis: economic activity had been falling sharply, while inflation reached 1.5% daily – on the way to a difficult to imagine 17,000% annually – which had led 42% of the population to poverty and 12% to destitution. During his administration, inflation has decreased dramatically, to 2% monthly, and the most recent estimates from the International Monetary Fund anticipate the economy to grow 4.5% this year and 4.0% in 2026, after having contracted 1.3% in 2024. This growth would be the highest among the large economies of Latin America and is well above the 1.0% to 1.5% expected in Mexico. In a year and a half, the population in poverty decreased by 10 percentage points (in contrast, in Mexico it took six years to achieve a similar reduction).
The key to lowering inflation was controlling excessive public spending, which had resulted in a fiscal and quasi-fiscal deficit monetized by the Central Bank equivalent to 15 points of GDP. In a few months, Milei managed to put public finances in order, achieving a fiscal surplus for the first time in recent history. To achieve this, his team had to make a severe cut in public spending of 30% in real terms. Instead of reducing the deficit gradually – as President Macri had already attempted and as most economists would recommend – Milei opted for a forceful and decisive adjustment, repeatedly declaring that fiscal balance and surplus are “non-negotiable” principles for his government, considering them the cornerstone of his economic plan and the basis for the country’s stability and growth.
Many critics claim that “people do not eat fiscal discipline.” They are right: healthy public finances are a necessary but not sufficient condition for growth. For this reason, the other pillar of Milei’s plan has been a determined effort to deregulate and privatize state companies, focused on reducing State intervention, making markets more flexible and eliminating bureaucratic obstacles to promote productive investment and, with it, sustainable growth, employment and improved salaries.
Since the beginning of Milei’s administration, the opposition in Congress has hindered his most ambitious regulatory reforms and attempted to dynamite fiscal discipline efforts, undermining confidence for long-term investment and causing enormous financial instability. This deepened with the results of the local elections in Buenos Aires in September, which seemed to anticipate a defeat for Milei’s party in the October general elections. All of this occurred in the context of a country that still cannot access capital markets, so Milei had to turn to liquidity support from the United States Department of the Treasury to maintain stability.
Without a doubt, the cost of the adjustments has been high, and Milei himself warned from the beginning that a great effort would be necessary to return Argentina to the path of growth, after decades of looking for shortcuts that eventually end in crisis.
As the great thinker of the 19th century, Frédéric Bastiat, said, “the bad economist pursues an immediate benefit that will be followed by a great evil in the future, while the true economist pursues a great good for the future, even at the risk of a small present evil.”
The surprising thing, therefore, is not that Milei’s economic decisions are working – although there is still a long way to go. His plan, based on healthy public finances and the reduction of government obstacles to economic activity, in an environment of security and trust that encourages hard work, savings and investment, is what throughout history has been the basis of the progress and development of nations.
The surprising thing is that Milei has had the political ability to not only have been elected and remain in power, but to have obtained a clear mandate that allows him to continue and deepen his reformist path.
When Milei was elected president, many attributed his victory to the desperation of the population in an environment of deep crisis, which led him to opt for a “populist” proposal, without being fully aware of its implications. The expectation was that his “extremism” would cause great discontent and repudiation of his policies.
The great lesson of last Sunday’s elections is that a clear and coherent message, well founded on sensible proposals and executed with technical capacity, can receive the support of citizens, without having to resort to false promises, government handouts and the siren song of populist clientelism, which has done so much damage to Argentina and the rest of Latin America.
*The author is a professor and director of the Economic Environment area at IPADE Business School.
