Argentina's Economic Reboot: Milei's Liberalization

Two years into Javier Milei’s presidency, Argentina stands at a critical juncture in its modern economic history. Elected amid one of the country’s worst financial crises in decades, Milei took office in December 2023 with a promise to radically transform Argentina’s troubled economy. That transformation has been swift, controversial, and deeply polarizing. To his critics, Milei is a far-right ideologue dismantling the state; to his supporters, he is a necessary disruptor, a libertarian who has saved Argentina from a terminal economic spiral. Yet regardless of opinion, the facts on the ground show that Argentina is undergoing a significant pivot away from protectionism and toward market liberalization.

To fully grasp the extent of Milei’s reforms, it is essential to understand Argentina’s protectionist past. The country had long relied on a complex web of tariffs, capital controls, and subsidies to shield its domestic industries and manage chronic macroeconomic instability. Chief among these mechanisms was the “cepo cambiario”, a set of currency controls that tightly regulated access to foreign exchange. These restrictions led to the emergence of multiple exchange rates, including an official rate and various parallel market rates such as the “dólar blue.” The economy operated with little transparency, and the Central Bank’s reserves were depleted by attempts to manage the peso’s artificial value.

By 2023, Argentina’s public debt had climbed to over 90% of its GDP. Inflation soared into triple digits, fueled in part by the Central Bank’s printing of pesos to finance the fiscal deficit. The proliferation of short-term instruments such as the LELIQs (Letras de Liquidez) further strained the financial system. In a bid to postpone collapse, the government resorted to issuing “intransferible” bonds, locking in liabilities that had no market value. At the same time, the country faced a scarcity of U.S. dollars, limiting its ability to import essential goods and service foreign debt. This situation created fertile ground for Milei’s radical economic message, including his proposal to shut down the Central Bank and dollarize the economy.

Upon taking office, Milei’s administration immediately began to implement reforms focused on trade liberalization and deregulation. In early 2024, tariffs on more than 3,000 imported goods—especially in the manufacturing and consumer goods sectors—were reduced or removed. According to the Argentine tax authority (AFIP), the average applied tariff dropped from 12.2% in 2022 to 8.1% by the first quarter of 2025. This move signaled a sharp break with the protectionist policies of past administrations. The Ministry of Economy reported in March 2025 that non-automatic import licenses, which previously covered over 30% of all imports and delayed supply chains, were now required for fewer than 10% of products, vastly improving trade fluidity.

Export taxes, or “retenciones,” long a burden on the country’s powerful agribusiness sector, have also been gradually rolled back. Key agricultural exports such as wheat, corn, and beef have benefited from these changes, leading to higher production incentives and a boost in foreign exchange earnings. The Rosario Grain Exchange (Bolsa de Comercio de Rosario) estimated in March 2025 that agricultural exports were expected to rise by 17% compared to the previous year.

Perhaps the most complex and disruptive of Milei’s reforms has been in the realm of currency management. In June 2024, the administration unified the country’s multiple exchange rates and allowed the peso to float freely. Through a strategy known as the “crawling peg,” the official and parallel exchange rates were gradually brought closer together. By May 2025, the exchange rate had stabilized at around ARS 1,200 per U.S. dollar. The Central Bank of Argentina (BCRA) reported a decline in monthly volatility, and investor confidence improved. At the same time, capital controls were eased. Restrictions on dividend repatriation were lifted, and the controversial foreign exchange tax known as “impuesto PAIS” was reduced. According to JP Morgan’s Q1 2025 Emerging Markets Outlook, Argentina’s currency risk premium fell by 220 basis points between October 2023 and early 2025—a clear sign that financial markets were warming to the Milei administration.

These macroeconomic adjustments began to have a tangible impact on foreign investment. The United Nations Conference on Trade and Development (UNCTAD) noted that Argentina attracted $7.4 billion in foreign direct investment (FDI) during 2024, a 48% increase over the previous year and the highest figure since 2017. Greenfield investments surged in key sectors such as mining, energy, and logistics. The provinces of Jujuy, Catamarca, and Salta saw major commitments in lithium and copper mining, while companies like Enel and TotalEnergies expanded solar and wind energy projects. Argentina’s Mining Secretariat reported more than $4.1 billion in new mining investments between Q2 2023 and Q1 2025.

The Vaca Muerta shale formation has also become a renewed focus of energy investment. Reforms to pricing mechanisms and improvements in pipeline infrastructure attracted renewed interest from multinationals such as Chevron, Shell, and Tecpetrol, which have announced increased production targets for 2025. Agribusiness remains a core pillar of the economy, and liberalization measures have further incentivized growth in this sector, with the rollback of quotas and taxes improving margins for exporters.

On May 29, 2025, Argentina issued a peso-denominated sovereign bond targeted exclusively at foreign investors, raising $1 billion in a move hailed by the government as a symbolic return to international markets. Though the bond pays out in pesos and was issued under Argentine law, it was offered in dollars, thereby boosting foreign currency reserves. With a coupon rate of 29.5% and maturity in 2030, the bond included a two-year put option—an attractive clause for investors wary of upcoming political uncertainty. Economy Minister Luis Caputo described the auction as “excellent news,” stressing the importance of refinancing principal maturities. According to analysts cited by the Financial Times, the successful auction is a sign that Milei’s fiscal discipline and partial liberalization of capital controls are restoring investor confidence. Since his election, the spread on Argentine debt over U.S. Treasuries has dropped from 25 to 6.66 percentage points, a massive improvement in risk perception. However, doubts remain. Investors are still uncertain about Argentina’s long-term currency policy and the stability of reforms executed primarily through executive orders, which could be easily reversed by future governments.

Despite these achievements, major challenges persist. Inflation, although slowing, remains painfully high. The National Institute of Statistics and Censuses (INDEC) reported that year-on-year inflation stood at 67% as of April 2025. Real wages have struggled to keep pace, and many Argentines have seen their purchasing power eroded. Public discontent is rising, particularly in urban centers where subsidy cuts have led to higher transport and energy costs. Mass protests and union strikes have become a regular feature of Argentina’s political landscape.

Moreover, concerns linger about the sustainability of Milei’s reforms. The rapid pace of change has raised questions about institutional stability. Critics argue that without broad political consensus and a functioning legislature, these liberalization policies could be reversed in future administrations. The upcoming midterm legislative elections in late 2025 are likely to serve as a referendum on Milei’s economic model.

In summary, Argentina’s pivot away from protectionism and toward market liberalization is one of the most ambitious transformations the country has seen in decades. Whether this gamble pays off in the long term depends not only on economic data but also on the political and social support required to sustain such reforms. What is certain, however, is that the international community is watching closely, and for the first time in years, Argentina has returned to the radar of global investors.