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It has been almost two years since Argentina’s Javier Milei brandished a large, silver chainsaw at his political inauguration. But his dramatic promise to slash ministries and public spending has only contributed to further economic deterioration – severe enough that the U.S. recently extended a $20 billion lifeline. Before Milei’s election in December 2023, Argentina was struggling with serious economic challenges. It had the highest inflation rate globally, peaking at 211.4% in 2023, and is the world’s largest debtor to the IMF, owing $44 billion. The public’s initial appraisal was clearly contingent on the hope that his reforms would tackle Argentina’s chronic instability.
Yet Milei’s reforms have not strengthened the nation’s economy. In fact, quite the opposite: unemployment reached 7.9% in the first quarter of 2025, the highest in four years. His novel experiment of libertarian populism – combining anti-elite rhetoric with aggressive cuts to the state – directly shaped these outcomes. To curb inflation, Milei implemented some 300 austerity measures, such as laying off tens of thousands of government workers, slashing energy and transportation subsidies, freezing public infrastructure projects and wage pensions, and cutting government ministries.
While these measures temporarily reduced Argentina’s monthly inflation, rallied bonds, and lowered its risk of default, they simultaneously decreased economic activity, increased unemployment, and deepened poverty. Despite early signs of hope for positive change – especially during a temporary drop in monthly inflation and a rally in bonds after Milei’s first year in office – Argentina soon returned to crisis. The country has now defaulted on its international debt nine times, the peso has hit a record low, and investors are withdrawing their bonds and stocks. These results are a far cry from Milei’s promise to end the recession and restore stability.
Milei’s Chainsaw Populism – a performance
Javier Milei, is considered a libertarian-populist,. He cultivates a populist political style, promising to rid Argentina of its corrupt elite. But he also embraces a far-right libertarian ideology: he believes the free market is the only morally justifiable system for combating poverty.
Milei was an “outsider” when he was elected – he wasn’t affiliated with the main parties that have dominated Argentine politics. As a result, many Argentinians identified with Milei’s demonstrative anger and saw this new eccentric persona as a real chance to put Argentina on a better path. However, Milei cannot be called a “populist”, as his measures have significantly harmed a large portion of the electorate. Anchored in market rationality and lacking a people-centered vision, one can wonder if Milei’s stance as a political savior is not simply a performance.
Sacrificing the poor
Milei’s drastic austerity measures have come at a high social cost, with the brunt of the economic downturn falling on the working class. For nearly 40 years, Argentina’s poverty level had consistently hovered above 25 per cent – but in 2024, poverty rates climbed up to nearly 53 per cent, the highest in 20 years. A year into Milei’s presidency, many families have lost their homes and have needed to go to soup kitchens to feed their children. This illustrates how Milei’s policies, while designed to stabilize the economy, have disproportionately harmed ordinary citizens.
Milei’s falling popularity is evident, demonstrated by his recent defeat in the Buenos Aires legislative elections, where his party, La Libertad Avanza (LLA), received less than 34% of the votes, suggesting that voters are questioning whether his austerity measures are worth the social cost. Although some saw the austerity measures as a temporary sacrifice needed in order to restore economic stability, the recent spikes in poverty have led experts to increasingly question Milei’s “chainsaw” approach.
U.S. bailout saves the day?
The U.S. recently offered a $20 billion currency swap with the central bank of Argentina, with President Donald Trump ready to show “unconditional support” to Milei.
This lifeline further underscores the economic strain and shows that Milei’s reforms have not restored economic growth. This leaves Argentina reliant on foreign assistance despite promises of self-sufficient stability. News of American assistance has had a calming effect on currency markets. Argentina’s dollar bonds experienced a brief rally, and the peso strengthened temporarily, reflecting reduced investor anxiety. But will the U.S. intervention save the Argentinian economy? The bailout may offer short respite, but it won’t tackle the inherent issues with Milei’s chainsaw policy.
For this financial assistance to be effective in tackling Argentina’s external debt, it needs to be backed by a renewed IMF program – yet we know from the IMF reports that such programs come with austerity measures as attached conditions1, which would worsen the already dire conditions of the poor. Milei’s campaign against state intervention has only shown how deeply Argentina depends on it; evidently, policies which lead to rising unemployment and poverty will not bring economic growth. The U.S. bailout may buy time, but unless Milei actually begins to focus on the wellbeing of his citizens, Argentina may end up weaker, not stronger.
Edited by Patrick Armstrong.
The argument defended in this article is solely that of the author and does not reflect the position of the McGill Journal of Political Science, the Political Science Students’ Association, or the McGill Department of Political Science.
Featured image by Gage Skidmore. Uploaded to Wikimedia Commons under Creative Commons Attribution-Share Alike 2.0.
- International Monetary Fund, Argentina: Seventh Review… (IMF Country Report No. 24/37, January 31, 2024), 26. ↩︎
