Argentina on Two Clocks: Javier Milei's Shock, the Slow Grind of Society, and a Narrow Future

A brief scoreboard (late 2025)

Inflation: Monthly CPI plunged from the panic of ~25% in December 2023 to 1.5–2.1% a month by late spring–autumn 2025; the annual rate cooled to the neighborhood of ~32–40% by September. Prices no longer reprice every weekend; they still grind.

Fiscal balance: The administration posted the first overall surplus in ~14 years in 2024 and has maintained primary surpluses through 2025. The method was as blunt as promised: subsidy cuts, public works halted, payroll trimmed, transfers pared.

Capital controls: The government dismantled most of the "cepo" in April 2025, moving to a managed FX band, an IMF program of roughly $20B and a re-opened doorway for repatriating profits. Markets cheered; fragilities linger.

Poverty: Official measures spiked to 52.9% in 1H 2024—a generational shock—then eased into the high 30s/low 30s by mid-2025 as inflation receded. The average kitchen is still doing math with too few zeros.

Activity & jobs: After contraction in 2024, growth returned in 2025 (midyear prints near 6% y/y), while unemployment hovers around 7–8%, with sharp distribution: private-sector wages began outpacing inflation; public sector wages lag.

Politics: The midterm win gives Milei veto armor and momentum to deepen his program—helped, controversially, by U.S. support and a debated bailout architecture. This strengthens his hand; it also imports geopolitical conditionality.

What is working

1) Disinflation with teeth

The fastest win is visible in supermarket aisles: monthly inflation in mid-2025 fell to the lowest in five years, a shift from spiraling to gliding. That is not price stability, but it is the difference between drowning and treading water. Markets and the IMF have rewarded the shift with new financing and positive projections for 2025 growth. The achievement is material and measurable.

2) A real fiscal correction

For the first time in a long cycle, the state's cash flow points outward. The primary and even headline surpluses mark an unmistakable break with the deficit-addiction loop. Argentina has rarely imposed political pain this quickly to fix the budget. Whether you celebrate or lament it, it happened.

3) Removing the choke on capital

Ending (most) FX and capital controls in April 2025 simplified a maze that strangled investment, narrowed arbitrage, and shrank the black market for dollars. The new FX band is not a panacea, but it replaced a behavioral tax with rules investors can price.

4) A legal scaffold for big projects

The Ley Bases and its investment regime (RIGI) reframed Argentina's offer to capital—especially in lithium, hydrocarbons, and infrastructure. Execution is uneven, yet a first set of projects is moving, including a Rio Tinto lithium expansion; provinces are learning to bargain under the new rules.

5) A political runway

The October 2025 midterms didn't deliver a blank check, but they delivered enough. With roughly a third of the lower house secured, vetoes are safer and decrees harder to overturn. The administration now owns the next chapter, for better or worse.

What has been broken—or simply burned to the ground

Universities and scientific life

Public universities have been the country's social elevator. Massive protests in 2024 and 2025 reflected real budget stress, threatened operations, and a fraying compact with the educated middle class. The symbolism is corrosive: when labs go dark and salaries are eroded, people leave. Once the diaspora restarts, rebuilding takes a generation.

The welfare interface

Soup kitchens and local social organizations saw aid frozen, then litigated, in the same months when poverty spiked past 50%. The state's attempt to bypass intermediaries and police leakages may be warranted; the timing amid a shock was brutal.

Institutional restraint

The governing style—mega-decrees (DNU 70/2023), hard vetoes, and limits on strikes—shrank deliberative space just when social cushioning was thin. Austerity without dialogue reads as force, even when constitutional. Medium-term investment depends as much on rule stability as on tax rates.

Energy reliability under stress

The subsidy drawdown is macro-rational. The winter 2025 gas curtailments to industry during a cold snap showed how little slack sits in the system. As tariffs rise and investment cycles lag, reliability risk becomes political risk.

Social cohesion

The early-2024 shock is now in the historical record: poverty at 52.9%. The fall to the low-30s/high-30s later is welcome, but damage compounds—missed meals, dropped studies, chronic stress. The state cannot cut its way through that arithmetic.

The threats from here

FX credibility and the day after the elections

The new trading band can't be a shrine. Analysts expect widening and/or a step depreciation now that midterms are past; the "external support" narrative buys time, not fundamentals. A messy move would reignite pass-through and dent trust.

Dollarized politics

Tying stabilization to IMF money and Washington's lifeline brings leverage and optics. It also introduces a new veto player into domestic politics. If promises of U.S. support are contingent and politicized, policy risk becomes bilateral.

Extractive shortcuts

RIGI can unlock capital; it can also over-concentrate benefits, hollow out local linkages, and offload environmental liabilities to provinces already fiscally thin. Provinces will litigate sovereignty in court and in the street.

Institutional fatigue

Permanent emergency is not a theory of government. Austerity backed by decree and police power risks normalizing a brittle equilibrium where each policy win breeds opposition that is broader than the policy at hand. The right to strike debate is a litmus test.

The opportunities, if discipline turns into design

1) Make disinflation boring

The fastest way to entrench the inflation gains is to move from "heroic" to "procedural": a published FX rulebook with contingent triggers; an independent statistics arm shielded from ministerial mood swings; and automatic fiscal stabilizers that stop politics from chasing every shock. IMF templates exist; what matters is domestic ownership.

2) Pivot from cuts to contracts

The surplus must evolve from "we stopped spending" to "we buy specific outcomes": targeted cash transfers indexed to food baskets; transparent auctions for energy capacity; and a social floor for children and retirees that is cheap, predictable, and popular. Otherwise, each shock relitigates the austerity. (The poverty arc explains why.)

3) Treat universities as export industries

Knowledge is Argentina's quiet comparative advantage. Restore multiyear funding compacts for top public universities and CONICET labs with performance clauses, not patronage. The protests were a warning; the talent pipeline is the growth story in ten years.

4) Build reliability into the energy turn

A tariff reset without capacity planning is politics by coin toss. Pair price reform with fast-tracked pipeline, storage, and dispatchable capacity auctions—so the next cold snap doesn't force industrial curtailments. Link Vaca Muerta, renewables, and demand management into a map the public can see.

5) Re-write RIGI with provinces, not at them

Lock in local procurement, environmental baselines, and revenue-sharing escalators. The lithium basin's social license is a balance sheet item. One Rio Tinto-type approval isn't a sectoral strategy; a dozen projects with standardized impact bonds might be.

6) Normalize labor peace

You can't reform a country at war with its unions and universities indefinitely. Restore collective bargaining calendars and a narrowed, constitutional strike framework that respects essential services without criminalizing dissent; the Le Monde-documented decree went too far. Investors prefer boring to brinkmanship.

Verdict: The cure bit, then worked—now it must heal

The administration solved a problem that few governments dare to tackle: it stopped the spiral. Markets behave when the state stops faking its math. That's the "working" column, and it is significant.

The cost is not a rhetorical flourish. Universities, soup kitchens, and the protest-police boundary were all pushed to breaking points, sometimes needlessly. The government's early instinct to govern by decree—paired with an anti-mediating rhetoric—burned bridges it will need to cross to execute the long game. That's the "destroyed" column, and it will echo.

The future is narrow but navigable. If the FX regime is adjusted without panic, if the surplus funds contracts rather than just cuts, if RIGI becomes a pact rather than a carve-out, and if the state remembers that a republic is a conversation, not a command, then the two clocks can begin to agree. The midterm victory gives the government the room to pivot from shock to system. Whether it chooses to is the test.

Sources & further reading

Key facts were drawn from recent reporting and official data on inflation, poverty, midterm results, fiscal balances, the IMF program, FX reforms, protests, university funding, and investment regimes: monthly inflation lows and the 2025 path (Reuters; Buenos Aires Herald; BA Times); poverty spike and subsequent easing (INDEC via Reuters; BA Times; AP); fiscal surplus (Reuters; BA Times; Itaú); Ley Bases/RIGI and early projects (EY; Mayer Brown; BA Herald; Reuters); FX control removal and IMF facility (Reuters; U.S. Trade; AP); midterm outcome (Reuters live report); protests and university funding conflict (Reuters and BA Herald); winter gas curtailments (Reuters).