Research: Milei's Reforms in Argentina (2024–2026)
Reference document to inform multiple sections of the Venezuela S.A. plan. Research date: March 13, 2026
1. Context: The Argentina Milei Inherited (Dec. 2023)
| Indicator | Value at inauguration | Source |
|---|---|---|
| Annual inflation | 211% | Focus Economics |
| Poverty | 42% (H2 2023) | INDEC via Semafor |
| Fiscal deficit | -2.7% of GDP | Econlib |
| Debt/GDP | 157.6% | Michigan Journal of Economics |
| Ministries | 18 | Flossbach von Storch |
| Country risk (EMBI) | >2,000 bps | Focus Economics |
2. State Reform: The Chainsaw
Downsizing the state apparatus
- 9 of 18 ministries eliminated — 50% reduction in cabinet size
- ~48,000 public employees laid off (Dec. 2023 – Apr. 2025), 7% reduction of state payroll
- 2,700+ public works frozen
- 3.5 regulations eliminated per day on average
- Creation of the Ministry of Deregulation to dismantle bureaucracy
Sources: Buenos Aires Times; Flossbach von Storch; Heritage Foundation
Privatizations
- Aerolineas Argentinas and Enarsa (energy) privatized
- Ley Bases (2024): legal framework to privatize up to 41 state-owned enterprises
- Sectors affected: energy, mining, transportation, telecommunications
Source: AS/COA
Deregulation
- Elimination of price controls (milk, sugar, cooking gas)
- Liberalization of airline, real estate, and transportation markets
- Reduction of tariffs and import taxes
- Simplified business registration
3. Macroeconomic Results
| Indicator | Dec. 2023 | Dec. 2024 | Dec. 2025 | 2026 trend |
|---|---|---|---|---|
| Annual inflation | 211% | ~118% | 31.8% | 20–25% (est.) |
| GDP (growth) | Recession | +2.5% H2 | +4.4% annual | +3.5% (IMF) |
| Fiscal surplus | -2.7% GDP | +1.8% GDP | +0.9% GDP (Q3) | Positive |
| Poverty | 42% | 38.1% (H2) | 31.6% (H1) | ~27–32% |
| Debt/GDP | 157.6% | ~95% | — | 82% (proj.) |
| Country risk (EMBI) | >2,000 bps | ~1,080 bps | 630–650 bps | Target: 450–550 |
| Public jobs eliminated | — | ~34,280 | ~48,000 | Continuing |
Sources: Focus Economics; Buenos Aires Times; Brussels Signal; Freiheit Foundation
4. Monetary Policy: Dollarization Abandoned, Currency Competition
What he promised vs. what he did
| Campaign promise | Reality |
|---|---|
| Full dollarization | Abandoned. Opted for currency competition |
| Close the Central Bank (BCRA) | No. BCRA still operating with greater independence |
| Eliminate the peso | No. De facto bi-monetary system |
Source: Real Instituto Elcano
Monetary timeline
- Dec. 2023: 50% peso devaluation (shock therapy)
- Apr. 2025: Elimination of currency controls for individuals (cepo lifted)
- Apr. 2025: IMF agreement for USD 20B (48 months), USD 12B immediate
- Oct. 2025: Currency swap USD 20B with U.S. (Bessent)
- Jan. 2026: New inflation-adjusted exchange rate band scheme
Sources: PIIE; Funds Society; American Conservative
Lesson for Venezuela
Formal dollarization (proposed in Venezuela S.A.) was not implemented even in Argentina. Milei opted for a gradual path: devaluation --> stabilization --> currency competition --> exchange rate bands. Evidence that full dollarization is politically difficult even with an ideologically committed president.
5. Debt and Markets
| Indicator | Value | Source |
|---|---|---|
| Public debt/GDP projected 2026 | 82% | Michigan Journal of Economics |
| IMF agreement | USD 20B (48 months) | PIIE |
| U.S. swap | USD 20B | Eurasia Review |
| First intl. issuance in 8 years | USD 1B (Nov. 2025) | Funds Society |
| S&P upgrade | CCC+/C (Dec. 2025) | Funds Society |
| 2026 maturities | >USD 10B (USD 8.4B bonds + IMF) | UPI |
| Country risk target for issuance | 450–550 bps | Funds Society |
Lesson for Venezuela
Argentina returned to international markets after 8 years of exclusion through: fiscal surplus + inflation reduction + IMF agreement + credit upgrade. Venezuela, in default since 2017, would need a similar sequence but starting from a much worse base.
6. Foreign Investment and RIGI
RIGI Regime (Large Investment Incentive Regime)
- Investments >USD 200M
- Corporate tax: 25% (vs. 35% standard)
- Regulatory stability for 30 years
- International arbitration for disputes
Results and announced investments
| Sector | Projected investment | Timeframe | Source |
|---|---|---|---|
| Energy (Vaca Muerta) | USD 22B | 2026–2028 | VIZION |
| Mining (lithium, copper) | USD 31B announced | 5–10 years | Freiheit Foundation |
| Total RIGI projected | USD 33.9B | 5–10 years | UPI/Rosario Board |
| Total FDI proj. 2026–2028 | USD 42B | 3 years | VIZION |
Vaca Muerta: Production of 816,144 bpd (Aug. 2025), 65% of Argentina's total. Vaca Muerta Sur pipeline (USD 2B) will expand capacity to 700,000 bpd by 2026. Projection: USD 30B/year in oil exports within 5 years.
Lithium: Rio Tinto invested USD 2.7B in Rincon project (Salta). Argentina has 20% of identified global lithium resources.
Sources: Mining.com; ainvest
Important caveat
Net FDI was NEGATIVE in 2025: -USD 1.52B between January and November 2025, first deficit since 2003. Announced investments have not yet fully materialized; only 2 RIGI projects formally approved.
Source: Buenos Aires Herald
7. Social Costs and Criticism
Social impact
| Indicator | Worst point | Current situation | Source |
|---|---|---|---|
| Poverty | 52.9% (H1 2024) | 31.6% (H1 2025) | INDEC via BA Times |
| Child poverty | Peak in 2024 | 1.7M children lifted out of poverty | UNICEF via Freiheit |
| Retiree purchasing power | — | Dropped from 50% to 26.6% of basic basket | BA Times |
| Formal jobs lost | — | ~300,000 (public + private) | Freiheit Foundation |
| Manufacturing industry | -7.9% (2023–2025) | 2nd worst worldwide | Buenos Aires Herald |
Main criticisms
- Industrial decline: 2nd worst globally (-7.9%). Factory closures (Fate, 920 jobs)
- Pensions devastated: Purchasing power cut in half
- Soup kitchens defunded under accusations of corruption
- Mass consumption down 10.2% year-over-year (Feb. 2025)
- Negative net FDI despite investment announcements
- Inflation rebounded 5 consecutive months in early 2026 (may exceed 30% annual)
Sources: Buenos Aires Herald; Michigan Journal of Economics
8. Political Validation
- Legislative elections Oct. 2025: La Libertad Avanza won >40% vs. 31% for Peronism
- Interpreted as a mandate for free markets and reform continuity
- Sustained poverty reduction was key to popular support
Sources: Washington Post; Al Jazeera; NPR
9. Lessons for Venezuela S.A.
What IS applicable
| Lesson from Argentina | Application in Venezuela |
|---|---|
| Fiscal surplus as a credibility anchor | The sovereign fund needs fiscal discipline from Day 1 |
| Massive deregulation attracts investment | ZEETs can use the RIGI model (30-year stability) |
| State reduction works (18 --> 9 ministries) | Venezuela needs radical state reform (Georgia + Milei model) |
| Vaca Muerta as extractive model | Venezuela has the Orinoco Belt + Guri as an energy combo |
| IMF agreement as market signal | Venezuela will need an IMF program post-restructuring |
| Market re-entry after 8 years of exclusion | Venezuela has been in default for 9 years — the sequence is similar |
What is NOT applicable or requires caution
| Lesson | Why it doesn't apply directly |
|---|---|
| Dollarization abandoned | Venezuela is already de facto dollarized (~60–70% of transactions in USD). Formalization may be easier |
| Social austerity shock | Venezuela already has 80% poverty. There is no margin for worsening — the sequence must be different |
| Negative FDI despite reforms | Reforms don't guarantee immediate investment. Forward contracts are the correct mechanism for Venezuela |
| Industry devastated | Venezuela has no manufacturing industry to destroy — it can build from scratch |
| 300,000 jobs lost | Venezuela needs to CREATE jobs, not eliminate them (except PDVSA reform) |
Proposed hybrid model
Venezuela can adopt from Milei:
- Fiscal discipline (constitutional rule for surplus or spending limited to 3–4% of the fund)
- Deregulation (Venezuelan RIGI for ZEETs: 0% tax for 10 years, 30-year stability)
- Radical transparency (publication of all contracts, DOGE-style auditing)
- Monetary pragmatism (formalize dollarization, not half-measures like Argentina)
But must avoid:
- Social shock without a safety net (Phase 0 humanitarian response is an absolute precondition)
- Industrial destruction (Venezuela needs to build, not cut)
- Dependency on a single leader (constitutional rules > political will)
10. Executive Summary
In 2 years, Milei achieved:
- Inflation: 211% --> 31.8%
- Deficit: -2.7% GDP --> +1.8% GDP (first surplus in 14 years)
- GDP: +4.4% in 2025
- Poverty: 42% --> 31.6%
- Country risk: >2,000 --> 630 bps
- 48,000 public jobs eliminated
- 9 ministries eliminated
- First international debt issuance in 8 years
- Landslide electoral victory (>40%)
At what cost:
- Poverty spiked to 53% before declining
- Industry fell 7.9% (2nd worst globally)
- Pensions lost half their purchasing power
- 300,000 formal jobs lost
- Negative net FDI in 2025
- Dollarization — the flagship promise — was abandoned
Verdict for Venezuela S.A.: Argentina demonstrates that radical reforms can work with fiscal discipline and deregulation, but the social cost is brutal without safety nets. Venezuela must reverse the sequence: humanitarian safety net first (Phase 0), then fiscal adjustment.