Introduction to Milei’s Administration
The coming quarter will be crucial for Javier Milei’s administration, as it will define the rest of his term. After his unexpected victory in the October midterms, Milei is enjoying a second political honeymoon, with both Argentines and investors giving him a new lease on life. He must now turn this momentum into a solid political and economic program.
Economic Reforms
This week, Milei’s economic team took an important step in that direction. Central Bank Governor Santiago Bausili announced tweaks to the foreign exchange regime. While the substance of the change is less important than the acknowledgment that the scheme needed change, it is a good sign. The decision to increase the pace of devaluation of Argentina’s currency within the floating bands opens the door to a weaker peso, which should allow the Central Bank to start accumulating international reserves.
Inflation and Economic Stability
Milei won the midterms thanks to decreasing inflation, even if consumer price hikes have been increasing for six consecutive months. Argentines see a leap of 1.5 percent in May to 2.5 percent in November as stability when compared to monthly double digits, as seen during the transition between former president Alberto Fernández’s government and Milei’s entrance in late 2023. A strong peso has been a major factor behind overall price stability. However, Milei appears to be picking the option of pleasing the IMF and foreign investors who believe the economy needs more dollars in the Central Bank to be sustainable in the medium to long term.
Politics and Legislation
Milei is used to getting away with swimming against the tide of economists who have been critical of certain aspects of his program. He is a lone wolf who believes he can defy the gravity of Argentina’s economy as we have known it so far. By most accounts, the ruling party is in a perfect position to carry out many of the things Milei could not do in his first two years in office, namely, pass legislation. The Budget bill Congress started to debate this week is as much a fabrication as having no budget at all, which was the case for Milei in his first two years in office.
Labour Reform Bill
The most sensitive issue is Milei’s labour reform bill, which targets the heart of Argentina’s organised union movement, historically Peronist. It is a classic maneuver in national politics – debating labour reforms when economic activity is in decline. This is not a wise move, as the UIA manufacturing business chamber reported that the sector lost 21,190 jobs in the first nine months of 2025. Notably, even star sectors like energy and mining reported job losses of around 7,000 over the last year.
Conclusion
Milei needs to reinforce the virtuous circle that he inaugurated after the midterms. Passing legislation is crucial, but it is not only about approval; pushing changes through by ample, convincing majorities is also a relevant factor. With a majority of good choices, but stubborn inflation and weak employment, the coming months will be complex for Milei. The field is wide open for him, especially while the Peronist opposition continues to struggle to find its footing. Milei must make the most of this opportunity to turn his administration’s momentum into lasting change.
