In a stunning reversal of fortunes, Argentina under President Javier Milei has transformed from the brink of economic collapse to a burgeoning recovery within just over a year.

Elected in late 2023 amid hyperinflation, massive fiscal deficits, and stagnant growth, Milei implemented aggressive “shock therapy” reforms that defied conventional wisdom. By mid-2025, inflation had plummeted from 211 percent in 2023i to 43.5 percent, the fiscal deficit was erased, and GDP growth surged to 7.6 percent year-on-year in Q2.

This essay explores Argentina’s crisis, reforms, outcomes, and challenges, drawing parallels with Pakistan’s ongoing economic struggles. Pakistan, facing similar issues of high inflation, debt dependency, and low growth, stands at a crossroads. Through comparison, key lessons emerge for Pakistan: the need for bold fiscal consolidation, a very deep cut in the bureaucracy and government footprint, strategic deregulation, and a strict austerity to foster sustainable development.

Argentina’s economic woes were decades in the making. Once a prosperous nation in the early 20th century, Argentina descended into cycles of populism, debt defaults, and inflation fuelled by excessive government spending, subsidies, and protectionism. By 2023, the country was grappling with a 211 percent annual inflation rate, a fiscal deficit exceeding 4 percent of GDP, and negative growth. Poverty affected over 40 percent of the population, and the peso had lost significant value against the dollar. The Peronist government’s policies, including price controls and expansive welfare programs, exacerbated the crisis, leading to nine IMF bailouts since 1958. Milei, a libertarian economist and outsider, campaigned on radical change, promising to “chainsaw” bureaucracy and embrace free-market principles.

Upon taking office in December 2023, Milei unleashed a series of shock measures. He devalued the peso by 54 percent, slashed subsidies on energy, transport, and utilities, deregulated key sectors, and reduced the number of government ministries from 18 to 9. Over 45,000 public sector jobs were cut (while Pakistan needs to cut bureaucracy and manpower by more than 50 percent), and export taxes were lowered to boost competitiveness. These reforms aimed to achieve fiscal surplus, stabilize the currency, and........

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