Javier Milei and his measures, live: the Government's agreements for 2027 and the legislative agenda in Parliament

The Argentine Central Bank (BCRA) has firmly rejected criticisms from economists who suggested that accepting a small increase in inflation could help boost economic activity. Vice President Vladimir Werning defended the government’s proposed constitutional reform aimed at restoring the BCRA’s core mission, emphasizing that even moderate inflation poses severe risks to households. During a press conference, Werning dismissed the notion that a slight rise in prices would be acceptable, calling such views “gravísimo” (extremely serious). He argued that persistent inflation erodes household wealth over time, citing data showing that between 2003 and 2023, Argentina’s cumulative inflation reached approximately 50,000%, reducing the purchasing power of $1,000 to just $2, representing a loss of nearly 99.8% of its real value. Werning highlighted the long-term consequences of this trend, estimating that the so-called “inflation tax” resulted in a net loss of $390 billion for Argentinian families during the same period. This figure reflects the erosion of private savings, with households losing substantial portions of their accumulated wealth. The BCRA also calculated that the state itself suffered a financial loss of around $553 billion, equivalent to roughly 85% of GDP, due to mechanisms used to finance public spending. These included Letters Intransferibles ($116 billion), Temporary Advances ($142 billion), distribution of accounting profits ($113 billion), other assistance mechanisms ($43 billion), and the cost of sterilizing pesos ($138 billion). The debate intensified following comments from economist Roberto Frenkel, a former professor of President Javier Milei, who argued that Argentina needed to accept higher inflation and a stronger dollar to improve competitiveness. However, not all economists agreed. While some, like Emmanuel Álvarez Agis, cautioned against relying solely on currency depreciation, others, including Miguel Ángel Broda, suggested that a stronger dollar might alleviate pressure on productive sectors. Ricardo Arriazu, another prominent economist aligned with Milei, strongly opposed the idea of devaluation, comparing it to asking someone to change the length of a meter to measure more. “When the dollar moves, all prices move,” he warned, highlighting the cascading effects of exchange rate fluctuations. Meanwhile, the government’s push for economic reforms has had tangible impacts on everyday life. According to data from the Institute Argentina Grande (IAG), over one million people have lost access to private health insurance since Milei took office. This follows the deregulation of the prepaid healthcare market under Decree 70/2023, which allowed prices to rise far faster than inflation. Between December 2023 and June 2026, the cost of prepagas increased by 460%, while the national inflation index rose by 320%. As a result, the number of individuals without coverage, whether through prepaga, mutual, or social security, jumped from 9.4 million to over 10.6 million, representing an increase from 32% to 35.6% of the population. The shift has also affected public health services. National social security institutions have lost over 1 million beneficiaries since Milei’s election, primarily due to the loss of 235,000 registered private-sector jobs. Sectors such as commerce, rural workers, public employees, and construction saw the largest declines in enrollment. Meanwhile, the mutual fund for self-employed workers, known as monotributistas, saw a dramatic 154% increase in membership, reflecting growing informal employment and reliance on public services. These developments underscore the broader challenges facing Argentina’s economy. With inflation remaining high and growth sluggish, the government faces mounting pressure to maintain fiscal discipline. Recent reports indicate that the primary surplus, a key indicator of fiscal health, is entering a more difficult phase. Despite a temporary improvement in July 2026, driven largely by postponed tax filings, the overall fiscal situation remains precarious. Tax revenue fell by 5% year-on-year in the first half of the year, while public expenditure declined by 1.9%, leaving less room for further austerity measures. As the country grapples with these economic pressures, the debate over monetary policy continues. Some economists argue that a stronger peso could provide stability, while others warn that excessive caution might stifle growth. The government, meanwhile, remains committed to its reform agenda, aiming to restore the BCRA’s independence and curb inflation. Whether these efforts will succeed depends on how effectively they address both structural weaknesses and immediate economic concerns. For now, the focus remains on maintaining fiscal discipline and rebuilding trust in the nation’s economic framework.