Argentina Is on a Path to Economic Success (Nouriel Roubini, 11/03/25, Project Syndicate)
Thus, heading into the recent legislative election, Argentina’s problem was about liquidity, not solvency. With electoral uncertainties weighing on growth this year – especially after the Peronist opposition performed better than expected in Buenos Aires’s provincial election in September – investors had grown nervous. Following a couple of corruption scandals and tactical mistakes on Milei’s part, the peso had weakened, despite interventions to keep the exchange rate within a set band. Domestic interest rates surged, Argentina’s sovereign spread widened significantly, and the stock market weakened. If the Peronists could take enough seats to wield an effective veto, Milei’s entire reform program could unravel.
But since Argentina’s problem was merely about liquidity, Milei sought and received a controversial $20 billion swap line from the US Treasury, whose support was conditional on him prevailing in the election. In the event, he and allied parties triumphed, picking up seats in both chambers. By fixating so much on electoral uncertainty, Milei’s political links to US President Donald Trump, and an overvalued exchange rate, the financial commentariat had ignored the promise of his radical fiscal and other reforms.Now, for the first time in ages, Argentina may escape the policies that have repeatedly driven it into debt defaults and high inflation. After the most recent Peronist administration had pushed the country close to an inflation spiral and another default, Milei started cleaning up the mess with ruthless efficiency. While many have criticized his draconian approach, the results of the October election show that the Argentine people would prefer short-term economic pain over a return to Peronist policies.