Among the many campaign promises that took Javier Milei – to the surprise of many – to the Presidency, some, it is already known, will only be remembered for being shelved in the archives.
Dollarisation would be one, at least in his first term. Not from any lack of conviction on his part but the imposition of his two main sponsors – neither the International Monetary Fund (IMF) nor the Donald Trump administration in the United States support the idea. Without these sponsors, any attempt at implementation would be impossible. The implosion of the Central Bank belongs to the same list. The elimination of inflation is in process of discussion. While structurally shrinking the rise in prices, Milei will probably end his four-year term with Argentina’s Consumer Price Index higher than promised and perhaps still in double digits, perhaps even with a “two” as the first of those digits. It seems almost impossible that 2026 will end with the 10 percent laid out in the Budget – we shall see this year.
Yet for one chapter of the Milei campaign manifesto, implementation and will to deepen are beyond discussion. The fiscal surplus against everything and everybody will surely be the most important inheritance left by Milei to his successors, including possibly himself for a 2027-2031 presidential term.
The La Libertad Avanza leader literally showed the world this month that he was capable of taking Argentina’s public accounts from a fiscal deficit of over three percentage points to a primary surplus (revenue minus spending) of 1.8 percent of Gross Domestic Product in 2024 and 1.4 percent in 2025. Bearing in mind that one point represents approximately US$5 billion (a conservative calculation), Milei took the country from a drainage of US$15 billion to accumulated savings of US$15 billion in his first two years of government. In real terms, it is a monetary movement of approximately US$30 billion. And if his performance in the last two years of his term repeats at least one percentage point, the accumulated change of trend would top US$40 billion in total.
It should be recognised and said – with its pros and cons – that in Argentina’s economic history there has never been austerity on such a grand scale, as undertaken since late 2023 by the libertarian government. Not to mention the accumulation of public accounts since the recovery of democracy in 1983 until now. Nobody even comes close. Nobody can doubt either the achievement or the conviction behind it. What can be done at this stage is to measure the costs.
2025’s numbers were carefully analysed by economist Nadin Argañaraz, the head of IARAF (Instituto Argentino de Análisis Fiscal) institute, who reported that the accumulated primary surplus through to last December reached 1.4 percent of GDP and the financial (after payment of the interest on debt) 0.2 percent of annual GDP. In relation to 2024, the primary surplus fell 0.43 percentage points while the fiscal surplus dropped 0.13 percentage points of GDP. The IMF bears in mind the former – Economy Minister Luis “Toto” Caputo can look their monitoring team in the eye when they arrive in Buenos Aires next month, vehemently showing off his achievement. This represents the money not printed with the quantity of pesos thrown at the financial system to cover fiscal deficits at zero. Obviously, the same cannot be said of the Central Bank’s international reserves, where Caputo and his team failed to meet targets in 2024 and will need a waiver from the Fund’s technicians. This will already be announced next month.
Analysing the numbers, as IARAF states, as a result of the budget implementation by the public sector last month, the accumulated primary surplus would be the equivalent of 1.4 percent of GDP. The fiscal surplus would be the equivalent of 1.2 percent of GDP without counting the capitalised interest. The primary surplus was 1.8 percent of GDP in 2024 and the fiscal surplus 0.3 percent. In relation to the previous year (2024), the dynámics of revenue influenced by tax cuts and the increases in real spending on pensions and other items determined a relative deterioration.
The situation is complicated this year since there are various fiscal challenges, based on expectations that aggregate spending will not be going down in real terms, along with hopes of a real increase in revenue without considering the effects of the possible approval of the Labour Reform bill and other legislation. As reported, he IMF is looking very closely at the slow reactions of tax revenue to inflation on the rise. That also remains to be seen.
What is real and certain is where the fiscal adjustment has fallen in the first two years of government, especially respecting the area of the national public administration where the direct austerity of Milei, his people and his ideology has absolutely reigned. This was also analysed by Argañaraz, who informed that as of last November the payroll was 281,785 posts as against 341,473 in December 2023 – a fall of 59,688 posts. Of the total fall, the central administration represented 26 percent, the decentralised administration 33 percent and state companies 34 percent. One notable figure is that the number of public employees dependent on the national administration fell every month, with the central administration bearing the brunt at 15,780 posts. That was followed by the Post Office with 5,191 less employees, the railways with 3,504, ARCA revenue and Customs authority with 3,152, CONICENT national scientific research council with 2.074, state bank Banco de la Nación Argentina with 2,010 and state airline Aerolíneas Argentinas with 1,913.
When analysing the intensity of the reduction in each institution according to registered jobs, it emerges that four were cut 100 percent – i.e. they disappeared. These were ENOHSA (Ente de Obras Hídricas de Saneamiento) against water pollution, INADI (Instituto Nacional contra la Discriminación, la Xenofobia y el Racismo), INAFCI (Instituto Nacional de la Agricultura Familiar, Campesina e Indígena) and Desarrollo de Capital Humano Ferroviario Sapem overseeing railway museums. This quartet was followed by the Agencia de Publicidad del Estado Sociedad Anónima Unipersonal for state advertising with a reduction of 79 percent, the INCAA (Instituto Nacional de Cine y Artes Audiovisuales) film insitute with 51 percent less personnel and the Mint (Casa de Moneda) with 44 percent.
At the other extreme, the four institutions with the lowest percentage reduction of posts were INSSJP (Instituto Nacional de Servicios Sociales para Jubilados y Pensionados) running social services for pensioners with five percent, CONICET with 7.5 percent, INTA (Instituto Nacional de Tecnología Agropecuaria) with 10.5 percent and the SENAS (Servicio Nacional de Sanidad y Calidad Agroalimentaria) monitoring body 10.5 percent.
A direct and harsh chainsaw leading to the closure of state departments and public offices, the toughest since the arrival of democracy and also beyond. It is perhaps above in this department where Javier Milei most kept his electoral promises.
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