Javier Milei, Argentina’s libertarian president, is OK with being called “el loco” or “the madman” by pundits. However, he points out that what separates a madman from a genius are results. As he returns to Davos, he has plenty of results to show off, including a monthly inflation rate of below 3% compared to over 20% a year ago, a budget surplus, and an economy pulling out of recession.
Graham Stock, senior emerging markets strategist at BlueBay Asset Management, says Milei’s diagnosis of Argentina’s problem is correct and that his commitment to a balanced budget is key. Bluebay owns Argentine bonds, which have rallied over 100% under Milei, topping the returns of almost every other emerging market country.
However, it’s not just investors who are pleased with Milei. Laura Velasquez, a 19-year-old who sells T-shirts and dresses, was skeptical of Milei at first but now says she’d vote for him eagerly. Her family’s financial situation has improved with the economic stability that’s followed the initial chaos.
Millions of working-class Argentines like Velasquez have stuck with Milei, and his approval rating is higher than that of his political rivals. However, Miles faces significant challenges, including maintaining his support and winning the trust of the International Monetary Fund (IMF), which has previously provided Argentina with several failed rescue programs.
To secure a fresh IMF loan, Milei needs to exit capital controls and hold off stoking inflation without opening the purse strings. With a power-hungry opposition lurking, the journey won’t be easy. Despite the challenges, Milei’s supporters are optimistic, and even critics like Ian Bremmer, founder of the Eurasia Group, have been surprised by his success.