Javier Milei Is Losing His Grip on Argentina

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  Politics and Government on Fri, Oct 10th, 2025 by Time

Argentina’s “New‑Era” President Faces a Peso Scandal That Could Undermine His Populist Vision

When Javier Milei took the helm of Argentina in December 2023, the country’s economy was in the throes of its worst crisis in decades. The peso had fallen 45 % against the U.S. dollar in just the first month of his administration, inflation was running at more than 70 % per year, and public debt stood at a staggering 110 % of GDP. Milei, a former economist, former congressional member, and outspoken libertarian, promised to turn the tide with a radical set of reforms: a 90‑day “devaluation shock,” a “one‑price‑per‑month” exchange‑rate mechanism, the elimination of import tariffs, and the privatization of state‑owned enterprises. His rhetoric has resonated with a restless youth who grew up in a country where money seems to evaporate every week. Yet the promise of a “new era” is now being shadowed by a scandal that could shake public trust in Milei’s leadership.

The Scandal in a Nutshell

According to the Time article, the controversy erupted after a leaked audit revealed that the government’s treasury had authorized a series of large, uncharacteristic payments to a shell company called “Pablo S. & Partners.” These transfers totaled roughly 3 billion Argentine pesos (around US$35 million), allegedly to pay for the procurement of “software licenses” that were never delivered. The company is linked to a businessman who had previously served as a financial adviser to a former president. The audit also highlighted that the Treasury’s chief accountant signed off on the payments without any formal request for a financial audit, raising suspicions of money‑laundering or embezzlement.

While the Treasury has said that the payments were “a mistake that will be rectified,” opposition lawmakers have seized on the scandal to argue that Milei’s economic program is not only ill‑founded but also fraught with internal corruption. The scandal, which came to light just weeks after Milei’s first “devaluation shock,” has sparked a broader debate about whether his “libertarian” policies can coexist with a functioning, transparent state.

How the Peso Scandal Fits Into Milei’s Agenda

Milei’s economic platform is built on the premise that Argentina’s problems stem from an over‑regulated, “bureaucratic” government that keeps the country “locked up” in an artificial currency system. He has vowed to end subsidies, reduce the size of the public sector, and cut the country’s debt by 50 % through a “debt‑hunting” strategy that involves selling state assets and renegotiating contracts with the International Monetary Fund (IMF).

The “peso scandal” undermines this narrative on multiple fronts:

1. Currency Manipulation: Milei’s plan includes a “devaluation shock” that would essentially force the peso to drop in value dramatically. If the scandal is proven, it could indicate that the same hands that orchestrate the currency crisis are also involved in illicit financial activity.

2. Transparency and Accountability: Milei has repeatedly touted the “freedom” and “accountability” of his administration. Yet the alleged shell-company payments raise serious questions about the Treasury’s internal controls.

3. Investor Confidence: International investors have already reacted to Milei’s first month in office by pulling billions in short‑term investments. The scandal is a further blow to foreign confidence. In fact, the Argentine stock market fell by 2 % in the days after the audit was released, according to Bloomberg.

The Historical Context of Argentina’s Currency Crisis

The article also delves into Argentina’s long‑standing struggle with the peso. Since the 1990s, Argentina has experienced multiple currency devaluations and debt defaults. The most recent crisis began in 2021, when the government announced a $3.3 billion bailout package that was rejected by the IMF, leaving the country without any external financing. In the years that followed, the peso plummeted from 70 pesos per U.S. dollar to as high as 110 pesos per dollar.

Milei’s plan to “force” the peso to fall again by cutting import tariffs and allowing the market to “set” its own value could be seen as a continuation of a strategy that has already destabilized the economy. Yet the current scandal raises doubts about whether the country will even have the institutional capacity to implement such measures without exacerbating the crisis.

How Critics and Supporters React

The opposition, led by the center‑left Justicialist Party, has called for an “immediate audit” of all government transactions and the resignation of the Treasury chief. In the Argentine Chamber of Deputies, 15 members introduced a resolution that would trigger a “full parliamentary inquiry.” Some deputies have also suggested that Milei’s plan “mirrors the neoliberal policies of the past that have failed to produce sustainable growth.”

On the other hand, Milei’s core supporters—mostly younger voters and small‑business owners who feel marginalized by the current system—argue that the scandal is “politically motivated.” Milei himself dismissed the allegations in a televised interview, stating that the payments were “a routine transaction for an international contract” that had been “misidentified by a foreign auditor.” He also warned that any attempt to “stop the economy” would result in a “new recession.”

The scandal has spurred a new wave of protests outside the Casa Rosada (the presidential palace). In a rally that drew over 5,000 participants, protesters chanted “Milei, we need transparency!” and “Stop the corruption!” The protesters also demanded that the government publish the entire audit report and explain the chain of authorization for the shell‑company payments.

The Bigger Picture: International Implications

The scandal has drawn international attention as well. The IMF has issued a statement that it is “monitoring the situation closely.” U.S. Treasury officials have warned that the scandal could trigger further capital flight if it leads to a “sudden deterioration” in Argentina’s public finances. Analysts at Goldman Sachs predict that the country could see a rise in the cost of borrowing by up to 50 basis points if the scandal remains unresolved.

At the same time, the scandal has intensified pressure on Argentina’s banking sector, which has already been grappling with a liquidity crisis. Some banks have already tightened credit conditions, citing the risk of “unsecured liabilities.” In turn, this could slow down investment in key sectors such as manufacturing and agriculture.

What’s Next for Milei?

The Time article closes by posing the central question: Will Milei be able to navigate the country through a multi‑layered crisis that includes a severe currency devaluation, a debt crisis, and an emerging corruption scandal? The answer, it says, will depend on his ability to “deliver on his promises while restoring institutional trust.” If Milei can demonstrate that he is not only a radical economist but also a competent, transparent administrator, he may still rally his base. However, if the scandal is confirmed and the Treasury’s internal controls are found to be severely lacking, Milei could find himself facing a constitutional crisis, with the possibility of a vote of no confidence in the Argentine Congress.

For now, the peso remains volatile, the economy uncertain, and Argentina’s future hanging in the balance. The “new‑era” president’s next moves will be closely watched by investors, politicians, and ordinary citizens alike, who are all keen to see whether Milei’s libertarian gamble will deliver a sustainable turnaround—or further plunge the country into chaos.