In Argentina, President Javier Milei's sweeping economic policy changes have dramatically improved the outlook for the country's short- and medium-term economic and financial stabilization. But absent political-institutional reform, the risk of a return to instability will increase over the long term, largely due to the political system's inability to manage fiscal-distributional conflict. During former Argentine President Alberto Fernandez's term (2019-2023), unsustainable economic policies and a major pre-electoral surge in government spending nearly pushed Argentina's economy into hyperinflation. Despite another debt restructuring in 2020, the Fernandez government failed to re-establish macroeconomic stability and doubled down on interventionist economic policies. But since President Milei took office in December 2023, Argentinian economic policy has undergone radical change. Anchored on a massive fiscal adjustment, Milei's reform program has received support from the International Monetary Fund (IMF) and has led to a sharp decline in inflation while improving Argentina's government and external debt position. But...
