Argentina’s financial crash is the first big defeat for Trump’s global Maga movement
Chainsaw-wielding Javier Milei is no different from previous head-banger South American leaders
Ambrose Evans-Pritchard
26 September 2025 6:30am BST
The International Monetary Fund’s (IMF) third bailout of Argentina in seven years has already blown up. The fiasco goes from bad to worse.
Donald Trump is now having to backstop the anarcho-capitalist misadventure of President Javier Milei with $20bn (£15bn) of credit lines and swaps from the US treasury.
This rescue has set off a violent short-covering rally on the Buenos Aires exchange but it has not resolved any of Argentina’s pathological woes.
The Latin chainsaw darling of the global culture war has become a serious liability to Maga International Inc. Too much rhetoric has been invested proclaiming his fictitious “economic miracle”.
If Trumpian ideology starts to unravel anywhere, it will unravel first in Argentina.
“The country is in the hands of a frightened madman who is gambling with other people’s money,” said Prof Carlos Rodríguez, the “Chicago school” doyen of Argentina’s free marketeers.
He once advised Milei before concluding that “a person of his character could not possibly lead to a durable transformation of Argentine society”.
Rodríguez said currency controls under Milei had turned Argentina into the most expensive country in the world or close to it, hollowing out the industrial core and bleeding reserves, all kept afloat by foreign loans and a fickle carry trade.
It created an “explosive cocktail” that was bound to end badly, and so it has. For all the talk, he said there had been little fundamental reform of the labour market.
“Everything is now in ruins. We’re going to lose the IMF money, we’re in recession, and inflation is coming back,” he told Perfil. It is a harsh verdict but closer to truth than the panegyrics circulating in the Anglo-Saxon press.
“The world is talking about Argentina’s economic miracle: everybody can see it, except Argentines,” lamented Milei last week. Well, indeed.
The IMF’s most recent bailout – also $20bn, on top of existing loans – was rammed through by the institution’s top brass in April against the strenuous objections of half the institution’s board members and in breach of normal lending conditions. Other multilateral bodies were dragooned into supplying a further $20bn.
This rescue effectively collapsed last week with a run on the peso and a full-blown crisis. Milei squandered the IMF dollars trying to prop up an overvalued currency within semi-fixed bands rather than letting the peso find its market level.
He subsidised capital flight by Argentina’s elites, who have a nose for currency arbitrage. Plus ça change.
Argentina now owes the IMF $42bn, as much as the next 10 countries combined, or 35pc of the fund’s entire lending portfolio. Kristalina Georgieva, the IMF’s managing director, has some explaining to do.
“This time, it’s different. This time, there is decisiveness to put the economy on a sound track,” she assured us in April. It does not surprise me that she would utter such pearls with a straight face, but it does surprise me that so many believed it.
It has since come to light that Trump more or less ordered Georgieva to shore up Milei, and she obliged. The IMF kept handing over money even though Argentina had failed to build up foreign reserves as stipulated in the accord.
The world is now waking up to discover what Rodríguez and a chorus of veteran Argentine economists have long been warning: that Milei’s government is not so different from a long string of head-banger administrations that have cursed Latin America over the decades.
Personally, I find it charmingly eccentric that Milei has cloned his dead English mastiff Conan and named the four successors after the pantheon of free market economists.
My objection is that the Milei plan does not do what it says on the tin. He has not in fact thrown open the economy to market forces. He has not liberated Argentina from the eternal misrule of the Peronist casta. He invokes Smith, Hayek, and Friedman only to betray them.
Argentina hit absolute rock bottom two years ago. The country was ready to try anything. Milei had a window to do what Germany’s Ludwig Erhard pulled off in 1948, when he hacked down a thicket of controls left from the war in one big bang reform. Erhard halted hyperinflation almost overnight and unleashed a supply-side Wirtschaftswunder that ran for 30 years.
You have a single shot with stabilisation plans in emerging markets. If Milei lacked the courage to follow Erhard – the true chainsaw hero of modern times – he should at least have used IMF funds to help float the peso, lance the boil and restore Argentine competitiveness.
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