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In 1976, the military dictatorship "Proceso de Reorganización Nacional" (National Reorganization Process) took power, encouraging human rights violations. The next seven years were marked by the disappearance of thousands of people, including both members of the political opposition and anyone disagreeing with their methods. They established a neoliberal economy and liberalised trade, but Argentina, in hyperinflation, reached 600% annually due to accumulated debt and uncontrolled money printing.
The following century is characterised by a return to democracy and the introduction of a new currency, the austral. This monetary attempt to stabilise the economy failed, and hyperinflation reached 3000% annually.
The convertibility plan established in the 1990s focused on pegging the Argentine peso to the US dollar at an exchange rate of 1:1. This policy initially reduced inflation and increased trade; however, as the dollar appreciated, the peso became overvalued. To maintain parity, Argentina relied on foreign loans, accumulating significant debt.
The economic crisis of 2000 was triggered by Argentina's inability to maintain the fixed exchange rate. Again, it defaulted on its debt of $132 billion and transitioned to a floating exchange rate system. Consequently, the peso was heavily devalued, boosting inflation.
President Macri, elected in 2015, attempted to reduce this budget deficit. However, the peso continued to depreciate, and Argentina turned to the IMF for a loan of 57 billion US dollars. Inflation, however, soared to 50%, and the currency lost half of its value.
Over the past ten years, Argentina has experienced frequent price increases of over 10%, with inflation rates rising from 23,90% in 2014 to 94,80% in 2022. According to the IMF and the World Bank, the average Argentine inflation rate between 1980 and 2022 was 206,2% annually. In 2023, this statistic rose to 211,4%.
The following century is characterised by a return to democracy and the introduction of a new currency, the austral. This monetary attempt to stabilise the economy failed, and hyperinflation reached 3000% annually.
The convertibility plan established in the 1990s focused on pegging the Argentine peso to the US dollar at an exchange rate of 1:1. This policy initially reduced inflation and increased trade; however, as the dollar appreciated, the peso became overvalued. To maintain parity, Argentina relied on foreign loans, accumulating significant debt.
The economic crisis of 2000 was triggered by Argentina's inability to maintain the fixed exchange rate. Again, it defaulted on its debt of $132 billion and transitioned to a floating exchange rate system. Consequently, the peso was heavily devalued, boosting inflation.
President Macri, elected in 2015, attempted to reduce this budget deficit. However, the peso continued to depreciate, and Argentina turned to the IMF for a loan of 57 billion US dollars. Inflation, however, soared to 50%, and the currency lost half of its value.
Over the past ten years, Argentina has experienced frequent price increases of over 10%, with inflation rates rising from 23,90% in 2014 to 94,80% in 2022. According to the IMF and the World Bank, the average Argentine inflation rate between 1980 and 2022 was 206,2% annually. In 2023, this statistic rose to 211,4%.
Javier Milei first made a name for himself as a flamboyant television host, addressing economic and political issues with bias. His theatrical frankness toward the Argentine ruling class drew attention, and he was quickly invited to popular TV shows to share his opinion and skepticism about the government. His entry into politics with the "Libertad Avanza" (Liberty Advances) movement and his presidential candidacy were strongly encouraged by his supporters.
Just before the start of the elections, the Argentine economy deteriorated sharply. Inflation reached a year-on-year ceiling of 140%, the value of the national currency fell from 300 pesos to one US dollar in July 2022 to 950 pesos, and poverty levels affected more than 40% of the population. During his campaign, Milei pledged to fight inflation by replacing the peso with the US dollar and distancing himself from the central bank. He also promised to eradicate numerous ministries such as education, health, and public works to reduce government spending and size. He openly shared some controversial positions, declaring that he denies the idea of human responsibility in climate change and wants to abolish abortion. Another campaign promise from Milei was his guarantee to reduce costs for employers and never raise taxes. To stabilise the economy, he wants to develop Argentine agricultural exports of grains, soybeans, wine, and meat.
Milei's mandate had a positive impact on inflation, which fell from 25,47% m/m at the beginning of his presidency, to 13% m/m in February 2024 and 4,58% m/m in June. These results can be attributed to his austerity measures and tightening monetary policy. Reductions in public spending and the money supply have begun to stabilise prices and contributed to reducing the budget deficit. However, prices have still increased by 280% over the past 12 months, and since Milei took office, the percentage of the Argentine population living below the poverty line has reached 60%. This is a social repercussion of his financial measures which, while managing to control inflation, result in cuts to essential services such as healthcare and education, in turn directly impacting the lower socio-economic scale.