Argentina’s Milei Bucks IMF Warnings as Public Backs Radical Economic Overhaul

Defying grim forecasts from the IMF and World Bank, President Javier Milei’s shock therapy economic plan gains traction among Argentinians—proving once again that when the system’s broken, voters prefer a sledgehammer to a Band-Aid. The libertarian firebrand slashes spending, bypasses bureaucratic gridlock, and dares creditors to blink first in a high-stakes game of fiscal chicken. Meanwhile, Wall Street analysts quietly update their ’disaster capitalism’ playbooks.

Goldman Sachs says that the peso has exceeded expectations

The blue rate went up to 1,165–1,185 pesos overnight after briefly falling to 1,355 last week. This happened because demand for real dollars ROSE again because of ongoing economic instability.

In Monday’s trading, the peso rose 3.7% to 1,103. This is close to where it was before currency controls were lifted on April 14. The central bank’s funds rose to $44 billion thanks to money from exports and a $12 billion IMF loan.

Due to President Javier Milei’s “zero deficit” strategy and a small amount of money in circulation, inflation fell from 300% per year in early 2024 to 56%. As exporters sell dollars, J.P. Morgan said that gaps in the foreign exchange market are closing. They projected that the spread would reach 5% in the long run.

In addition, INDEC, Argentina’s national statistics agency, says that poverty has dropped to 38.1%. This is a little less than the amount Milei took over. INDEC data also shows that inflation fell by 44.5% year-over-year in 2024.

The IMF maintains that Argentina will grow by 5.5% in 2025

Even though the country is doing better, the IMF still thinks that Argentina will grow by 5.5% in 2025.

The international lender said that “positive data” from the first few months of the year was used as proof. It admitted that a rise in market confidence had canceled the effects of tighter fiscal policy. This meant it could keep its forecast despite global doubt growing.

Milei’s government has also stepped up its plans for a budget surplus and promised not to get involved in the foreign exchange market until the peso gets stronger. Dollars coming in from grain exports and tight money conditions in the country have also helped the exchange rate.

“We still have that forecast basically because of the positive numbers we saw,” said Petya Koeva Brooks, a senior economist at the IMF, speaking at a press conference. “Despite the fiscal adjustment, there was an increase in confidence and that allows us to sustain the projection.”

However, Brooks warned that the prediction was more likely to be wrong because of tightening financial rules and price changes caused by a world that is becoming less stable.

They specifically pointed to the new tariffs put in place by US President Donald Trump that have caused problems and are expected to slow down global growth. Milei already bowed to Trump’s tariffs and is willing to work together with the US president, although there haven’t been any results yet.

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