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Argentina has surprised the world by posting its first fiscal surplus in over a decade. Under the leadership of Javier Milei, the country has implemented drastic cuts in public spending and stabilized its currency, gaining market confidence and reducing its country risk. Should Brazil follow the same path for its economic recovery?
When the world thought that the Argentine economy was doomed to a scenario of instability, the winds changed.
One of the most indebted countries in Latin America has achieved a feat that seemed unattainable: its first financial surplus since 2011 and the best primary result since 2009.
The announcement was accompanied by impressive figures and an optimistic speech from Javier Milei's government. But how did Argentina manage to turn the tables and achieve a historic milestone?
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According to the Minister of Finance, Luis Caputo, Argentina ended 2024 with a primary surplus of 1,8% of GDP and a financial surplus of 0,3% of GDP.
In absolute terms, the country recorded a positive balance of between 18 and 19 billion dollars.
These numbers not only surprise experts, but also reflect a shift in the country's economic direction.
Fiscal austerity and Milei's leadership
President Javier Milei, who took office in December 2023, has opted for bold economic reforms and a fiscal austerity agenda.
Drastic cuts in public spending, dismissal of 33 public employees and suspension of price controls were some of the measures implemented.
The objective, according to the government, was to restore macroeconomic stability and bring social peace.
In a post on the social network X, Caputo highlighted that the result was the fruit of firm leadership and teamwork by government ministers and secretaries.
“It is the result of the leadership of President Javier Milei combined with the teamwork of all the ministers and secretaries of this government, who understood the importance of fiscal austerity,” he said.
Argentine peso stands out
One of the big surprises of the year was the performance of the Argentine peso. According to a consultancy cited by Veja magazine, the currency was considered 'the best in the world' in 2024 when adjusted for local inflation. Furthermore, the difference between the official exchange rate and the blue dollar has plummeted from 200% to around 20% in the past year, an indication of greater market confidence in Argentine monetary policy.
Country risk falling
Another indicator that attracted attention was Argentina's country risk, calculated by the American bank JP Morgan.
This index, which measures investors' perception of risk in relation to the country's debt, fell to its lowest level since 2018.
The reduction reflects renewed confidence in Argentina's ability to honor its financial commitments and maintain economic stability.
The political and economic impact
Milei's reforms did not come without controversy.
The dismissal of thousands of public employees generated criticism and protests, while the cut in subsidies directly affected the most vulnerable population.
Despite this, the government argues that these measures were necessary to get the economy back on track.
According to Veja magazine, The fiscal austerity implemented by the Milei government has brought concrete results, but has also exposed challenges that still need to be addressed.
The drop in country risk and the strengthening of the peso are positive signs, but the sustainability of this recovery will depend on how the government deals with social and structural issues in the long term.
Should Brazil follow suit?
A Argentina's economic recovery raises questions about the policies adopted in Brazil.
While its neighbors are achieving surpluses and stabilizing their currency, Brazil is facing challenges related to inflation, public debt and market confidence.
Could measures similar to Milei's work on Brazilian soil?
With a financial surplus that has not been seen for more than a decade, Argentina is showing signs that fiscal austerity and structural reforms can bring significant results.
However, the social and political costs of these measures continue to be a topic of debate within and outside the country.
And you, reader, do you believe that Brazil should adopt policies as bold as those implemented in Argentina? Leave your opinion in the comments!
Coming out of a coma… this situation is not something anyone would envy…
Thirty years ago, China was not an economic powerhouse and Brazil was already underperforming economically. Today, China is the second largest economy and we are still like windsocks at an airport. We pay the highest tax rate in the world and we do not have a decent life. Governments should combat corruption with strict laws, because there is no shortage of laws, but they are weak. It is advantageous to plunder public property. When someone is convicted, the defendant pays a small fine. And then he goes off to enjoy the money he has collected from corruption hidden in some tax haven.
IF ARGENTINA IS ENVIABLE IN BRAZIL, WHY DON'T YOU GO THERE? AND IF YOU GO TODAY, TOMORROW WILL BE A DAY, BUT DON'T WORRY, BOLSONARO, NEVER AGAIN. GADAIADA. LOL