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• Milei has successfully pushed through major economic reforms despite political opposition and a lack of congressional majority.
• Milei advanced his libertarian agenda by forging alliances with provincial governors and strategic compromises in Congress.
• His economic reforms have successfully contributed to fiscal discipline and reduced inflation, but increased poverty due to subsidy cuts.

Why is Milei HOT?

Answer: Milei has successfully passed key economic reforms that have attracted foreign investment, reduced inflation, and achieved fiscal discipline. 

On December 10, 2023, President Javier Milei assumed office in Argentina, bringing with him an ambitious economic agenda. His campaign was largely centered on economic reform, with one of his key promises — and a major rallying point for his supporters — being the implementation of libertarian free-market policies aimed at reducing inflation and government intervention in the economy.

Since becoming president, Milei has turned his campaign promises into action. He has successfully passed legislation that shifts Argentina’s economy toward a market-driven, pro-investment model, aligning with his libertarian vision for the country. 

A prime example of this is Milei’s comprehensive omnibus law (“Ley Bases”), which he successfully passed in July 2024. Initially proposed in April with over 600 measures, the law failed to gain approval, due to disagreements from Congress where Milei lacks a majority. By July, however, Milei succeeded in securing approval for a streamlined version, with around 200 measures. This legislation is a cornerstone of his economic agenda aimed at reducing state intervention and promoting investment. Passing such a major law package demonstrates Milei’s ability to push through substantial reforms despite having a congressional minority, making his temperature hot, but not blazing, due to the necessary concessions.

A key component of the omnibus law is the the RIGI program (Régimen de Incentivos para Grandes Inversiones, or Incentive System for Large Investments in English), which offers 30-year tax concessions and simplifies foreign trade regulations, particularly to attract Western investments in high-potential industries, such as energy, raw materials, infrastructure, technology.  By providing long-term incentives and easing bureaucratic hurdles, the program aims to drive foreign capital inflows, supporting Argentina’s shift toward a more market-driven economy.

Beyond the legislative achievements, Milei’s economic program has translated into concrete results. His reforms made significant progress in reducing inflation, with the monthly rate dropping to 2.7% by October 2024. Moreover, for the first time since 2008, Argentina recorded a monthly budget surplus. The country’s stock market also achieved the highest global returns, outpacing other nations, while foreign companies began announcing new investments, spurred by Milei’s RIGI program. 

Additionally, the International Monetary Fund (IMF) projected a 5% growth for 2025, signaling the potential for economic recovery after two years of recession. These achievements warm Milei’s heat level given that improving the economy was a central promise in his campaign and therefore plays a key role in sustaining his public support. However, Milei’s policies have also increased the number of people living under the poverty line in Argentina, with the poverty rate at almost 53%, which is the highest level it has reached in the last two decades. This can be attributed to his social program cuts, that include for instance reductions in food, energy, and public transport subsidies.

What is changing Mileis’s heat level?

Answer: Milei’s heat level is changing due to his ability to push economic reforms despite political opposition and increasing investor confidence in Argentina.

One of Milei’s biggest challenges has been governing with a minority in both chambers of Congress while lacking support from the country’s 24 provincial governors, none of whom belong to his ‘La Libertad Avanza’ party. Since taking office, he has encountered strong resistance to his austerity-focused agenda, particularly due to cuts in federal funding to the provinces.

However, Milei has built alliances with provincial governors in order to gain legislative support needed to pass economic reforms. In particular, the signing of the May Pact in July 2024 marks a turning point in the relationship between the President and his provincial counterparts. This agreement helped Milei secure their support by establishing a cooperative framework after a period of fiscal disputes. In exchange for their backing, he demonstrated a willingness to negotiate on issues such as revenue-sharing adjustments, tax reforms, and labor policies—addressing certain provincial concerns while staying committed to his broader economic agenda.

Moreover, Milei is capitalizing on Argentina’s resource wealth and newly embraced open-market policies to attract foreign investment, particularly in energy. His presidency has seen Argentina secure its largest-ever foreign investment, a $30 billion gas liquefaction plant in Rio Negro, along with Chevron’s $3 billion investment in the Vaca Muerta Sur oil pipeline. Argentina’s lithium sector is also drawing major interest, with investments from China, the U.S., and global mining firms seeking to secure critical minerals. These deals reflect investor confidence in Milei’s open-market policies, driving a surge in foreign investment.

What is driving Milei?

Answer: Milei is driven by a commitment to market-driven reforms and the political need to secure support for his agenda.

Milei’s political vision is shaped by a strong belief in libertarian, free-market economics, a conviction that has guided his career. Before entering politics in 2019, he was an economics professor and a vocal advocate for policies similar to those of Chile’s Pinochet, reflecting his commitment to a libertarian economic and political ideology. 

Influenced by the Austrian school of economics, he views the state as harmful and rejects interventionist policies, which he sees as the root of Argentina’s economic stagnation. Instead, he champions market-driven policies, emphasizing personal freedom and wealth creation while dismantling traditional welfare structures. By moving away from traditional Peronist economic policies, Milei seeks to address widespread public frustration with the inefficiency of previous governments by offering contrasting economic policies. Mieli’s approach reflects his belief that the way forward for Argentina lies in reducing government involvement and promoting individual initiative and market-based growth.

Beyond ideology, Milei is also motivated by the need to secure political support for his reforms. His congressional minority has made passing legislation difficult, a challenge compounded by opposition from provincial governors. To break the deadlock with the governors, he negotiated the May Pact, offering policy concessions in exchange for their cooperation.As for Congress, the upcoming October 2025 midterm elections present an opportunity for Milei to secure a legislative majority.

He has already taken steps to improve his chances, including suspending PASO (Primary, Open, Simultaneous and Mandatory Elections), Argentina’s primary system used to test voter preferences and candidates. Framing it as an unnecessary expense, he secured its suspension in February 2025. This makes it harder for opposition parties to organize while increasing Milei’s chances of gaining congressional seats and advancing his agenda.

What does this mean for you?

Answer: Milei’s economic policies align with a broader trend towards deregulation, while also drawing attention to social cuts that often accompany such measures.

In recent years, there has been a growing inclination toward deregulation, not only in emerging markets but also advanced economies. For instance, the European Union has pursued regulatory simplification through initiatives such as the Better Regulation Agenda. Such developments prompt a discussion about whether there is a shift away from Keynesian-inspired economic governance toward models that prioritise market mechanisms and reduce state intervention. 

Argentina under Milei may be viewed as a test case for such an approach. So far the country is still in recession and Milei’s policies have prioritized fiscal stabilization over immediate economic expansion. However, the IMF projects a 5% growth for 2025.

If his policies can reduce inflation while also sustaining growth, Milei could set a precedent for libertarian economic governance. Recent developments, such as the appointment of Argentina’s Minister of Deregulation and State Transformation, Federico Sturzenegger, to an IMF advisory board, suggest growing international interest in Argentina’s policy direction. 

However, as states explore strategies to improve competitiveness and reduce bureaucratic inefficiencies with deregulation, a debate arises on how to balance these goals with social protections and public accountability. Looking at past leaders who implemented significant liberal economic policies, such as Reagan, Thatcher, and Pinochet, these measures were often accompanied by substantial cuts to social welfare. Whether such policies can be implemented while maintaining state responsibilities to citizens remains a key consideration in current economic policy making.