Behind the dust raised by the investigation surrounding Claudio “Chiqui” Tapia, head of the Argentine Football Association (AFA), Javier Milei’s government is beginning to make significant decisions a correction on one aspect of the economic stabilization plan and implicitly the admission that the course maintained in the election year had been exhausted. Almost all economists, whom the ruling party usually disparages, have emphasized this.
These corrections would demonstrate a change in the external context on which the government relies. International Monetary Fund (IMF) policy once again takes precedence. It was relegated when Finance Minister Scott Bessent intervened directly. Both recommended it the need to start creating reserves in order to meet future due dates. But the pressure from the financial organization has been much greater than Washington’s involvement in recent weeks.
The observation became clear when IMF spokeswoman Julie Kozack celebrated the announcement by central bank chief Santiago Bausili with a statement. that from January 2026 the dollar bands will be adjusted to inflation and the government will be willing to buy up reserves.
The Libertarian government’s decision came a few days after several episodes that had passed. Luis Caputo, the Minister of Economy, sold with epic advantages the exit from the market to raise funds that will allow us to meet the maturities of $ 4,500 million that our country has in January. The adventure turned out to be weak: “Toto” barely earned $900 million with ratings of 9%. Similarly, in a message to an economic forum, the president explained that the reluctance to buy reserves was due to the risk that the maneuver could fuel inflation. Milei and his minister protested against these precautions They had no choice but to accept the new challenge.
An aspect that quickly caused some controversy. Economist Ricardo Arriazu, essentially a supporter of the official program, warned in a conversation with economic and financial managers that the new move would generate uncertainty about the dollar and beyond Pressure on inflation. He assured this against the background of a favorable balance of economic development.
The bandwidth regulation will no longer be updated at 1% monthly as before, but will initially be adjusted to the monthly 2.5%, which corresponds to November inflation. The same will happen in February based on the December index. If it were similar to the previous month, the correction would be 5% instead of 1%.
The first thoughts were as expected. The dollar has traded higher in recent hours. However, sovereign risk fell below 600 points, in line with the government’s announcement that it would be ready to buy reserves with the new system coming into force.
The government has preferred to take this route, which entails some relaxation of anti-inflation policies. This comes after a sharp slowdown was achieved but failed to break the 2% floor in the last seven months. With ever increasing decimal places. Milei just assured that inflation would finally be pulverized in August. It remains to be seen to what extent this forecast can be fulfilled with a continued high monthly index and the new mechanism for adjusting the exchange rate bands.
Authorities say they are prepared to take the risk because 2026 is a period of transition to the 2027 presidential election, with room for adjustment. Some observations should not be ignored either. The decline in inflation is almost an exclusive anchor that the government has in society. Now in a context in which the decoupling between income, consumption and prices is becoming increasingly clear.
The coming times will once again be characterized by the government’s dependence on the IMF program. Without expecting another rescue in an emergency, like the one Bessent carried out on the eve of the October elections. Relations with Washington remain good, but although the reasons for this are not clear, they appear to have lost intensity. Something Milei hopes to fix when he travels to Davos in January and can meet Donald Trump again.
This panorama, with a certain touch of concern, seems to be balanced by the dizziness that the libertarian government gives to its political actions. After some time, he sought opinion from Congress on the passage of the budget bill, which contained two issues that were causing social unrest at the time. He plans to lift emergency funding for the disabled and higher education.
Patricia Bullrich would aim for a similarly rapid path in the Senate with the labor reform project. This is a question of a completely different caliber that promises a longer debate, as its 170 articles are full of details that are not only opposed by the Unión por la Patria. The largest opposition quickly presented an alternative project. The General Confederation of Labor (CGT) plans to take part in the debate with a street mobilization.
The absence of persistent opposition may stimulate those within who will not yield to the libertarian government. Five replacements were announced within 48 hours, always with the same print. The dispute between Karina Milei, the Secretary General, and Santiago Caputo, the young communications advisor. The visible face of the forces of heaven.
Two of the movements proved to be the most important. Juan Pazo has resigned as executive director of the Customs Collection and Control Agency (ARCA). They assure that he will return to private activities. Taking his place is Andrés Vázquez with an obscure background, who reports to Caputo Juniors. At Banco Nación, Daniel Tillard resigned (he had come with Guillermo Francos) and Daniel Wasserman, an unmistakable disciple of the sister, took over the management.
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