The Bank of Spain acknowledged the success of Javier Milei's government in Argentina

Thanks to the Government of Javier Milei, Argentina's economy shows a remarkable transformation. Practically all key indicators reflect a clear improvement compared to 2023 and early 2024.

Analysis firms, private banks, and economists from various backgrounds acknowledged this success, which seemed almost unattainable when Javier Milei assumed the presidency.

Although the advances in economic and financial terms are undeniable, some reports still generate interest. An example is the analysis published this week by the Bank of Spain (BdE), led by José Luis Escrivá, former minister of the Government of Pedro Sánchez, who has had several disagreements with Milei in the past.

In an exercise of professionalism and objectivity, the BdE acknowledged that Argentina's financial variables have improved notably, that the economy shows clear signs of recovery, and that these advances are the result of the adjustment plan and the structural reforms promoted by Javier Milei's Government.

The report begins by highlighting that "the Government's adjustment plan (public spending cuts and strong devaluation of the official exchange rate) managed to quickly reduce inflation, which went from 25% month-on-month in December 2023 to 2.2% in January 2025".

The fiscal discipline implemented by Milei, with cuts equivalent to 5% of GDP in public spending, a historic reduction, curbed the growth of the monetary base, historically used by previous governments to finance the public deficit.

Additionally, the report delves into that "inflation expectations have converged toward a rate of 2% monthly, which coincides with the pre-announced monthly devaluation rate of the official exchange rate effective until January 31".

"The convergence in inflation expectations is due to the greater credibility derived from a more sustainable fiscal policy, as fiscal balance was achieved during 2024", it adds.

Despite that, the BdE points out that "to maintain and consolidate the achieved advances it will be necessary to deepen fiscal reforms (in order to reduce the complexity and distortions of the fiscal system) and release spending more sustainable (mainly salaries and pensions), as well as fiscal relations with the provinces".

"Driven by numerous structural reforms, the positive evolution of financial markets in Argentina continues, although challenges persist in the foreign exchange market", the BdE considers.

"Among the main actions undertaken by the Government in the field of economic deregulation last year are the liberalization of the rental market, the flexibilization of the labor market, and the partial deregulation of international trade, as well as the approval of a law that favors investments in some sectors of the economy, such as mining", it details.

Regarding economic recovery and spending adjustment, they explain that "in the second half of 2024 a restructuring of the public sector at the national level began. In this context, there has also been an improvement in financial variables".

"The gap between the official and parallel exchange rates has been considerably reduced and the Argentine central bank has resumed accumulating international reserves", concludes the analysis on Latin American economies by the BdE.