Welcome Avatar! The Milei government is facing a perfect shitstorm, with bonds in the red, pressure on foreign reserves, and a hostile Congress, combining political fragility and financial tension. Can Milei sustain his economic program with institutional support and investor confidence eroding at an increasing rate? Let’s find out.
“The worst is over.” With that phrase, President Javier Milei opened his national address as he presented the 2026 Budget.
From the Casa Rosada, Milei defended fiscal balance as a pillar of his government on Monday, highlighting the decline in inflation and poverty, and warning that any deviation in the public accounts would plunge the country back into an inflationary spiral.
But saying “lo peor ya pasó” (the worst part is over) in Argentina has the same ring to it as “this time is different” in financial markets: those words have marked pivotal points in Argentina’s history, where things indeed took a turn for the worse shortly after.
“The Worst is Over” in 2000
In the year 2000 during his New Year's address, then-President Fernando de la Rúa announced international protection measures under the denominator Blindaje, including contributions from the IMF, local banks, and the Spanish government, assuring that “the effort would now bear its fruits.”
I've been criticized and attacked. I fought hard and at times felt alone.
But all in all, we ended this year with a great success. The 2001 “Blindaje”. This shield is an unprecedented economic, political, and financial operation that generates such a large guarantee fund for the country that it removes any threat or doubt about Argentina's future.
2001 will be a great year for everyone. How wonderful it is to deliver good news.
All these measures sought to reduce Argentina’s country risk and guarantee financing in exchange for fiscal adjustment, a freeze on public spending, and pension reform. However, since they were adopted when it was already too late, far from stabilizing the economy, it was a prelude to the 2001 crisis.
De La Rúa’s words have an eery similarity to Milei’s 2026 budget speech, albeit with a very different economic situation: international debt was spiralling out of control, and Argentina’s peso was pegged 1:1 to the dollar, giving the De La Rúa admin very little room to manoeuvre in terms of monetary policy.
“The Worst is Over” in 2018
De La Rúa’s wording was slightly different even though the message was the same, but former President Mauricio Macri used the exact same words in March 2018 at the opening of the regular sessions of Congress, when he was trying to convey optimism in the face of a strained economy.
Defending his gradualism to reduce inflation and the fiscal deficit, Macri asserted:
“The worst is over.
In these first two years, we have built the foundation for Argentina to change forever.”
That morning, Macri didn't mention the word “inheritance” when referring to the soon to be proven unsurmountable problems inherited by his administration after twelve years of uninterrupted Kirchnerist governments, but he did reiterate that the path chosen by his administration was the correct path, and that the initial sacrifices were now a thing of the past.
Barely one month later, in April 2018, the peso started a fast-track devaluation and inflation started spiralling out of control as foreign bond holders began to unwind their Lebac bond positions denominated in pesos, unleashing a race against the peso that left the Macri government in jeopardy.
These two examples above showcase the reason why many Argentines will brace for impact as soon as an elected official starts talking about a smooth sailing economy from here on out. History shows that the opposite is usually the case. Will this time be different?
In his speech, Javier Milei reaffirmed that he does not intend to modify his economic policy and said that fiscal balance is non-negotiable. “The direction is set in stone.”
The rest of this article will go over the reasons for the recent market dump, — and why that dump started before the PBA election results — Milei’s chances in the midterms, political tensions and strategies from the Peronist opposition and short- to medium term economic outlook.