Argentine President-elect Javier Milei will struggle to implement his pledged structural reforms, like dollarization, due to a lack of support in Congress, which will likely see him instead prioritize spending cuts at the risk of increasing economic uncertainty and triggering mass protests against his new government. Libertarian candidate Javier Milei won Argentina's runoff presidential election on Nov. 19 after obtaining 56% of the vote, defeating center-left Economy Minister Sergio Massa, who obtained 44%. The election took place amid a deep economic crisis, as inflation in Argentina reached 142.7% year-on-year in October, the local currency (the peso) has depreciated substantially against the U.S. dollar in recent years, and the International Monetary Fund expects the country's GDP to contract by 2.5% this year. Milei campaigned on a promise to dollarize the Argentine economy, severely reduce public spending, and lift regulations and reduce state intervention in the economy to boost private-sector investment. In his first speech after winning the election, Milei said that Argentina's ''critical situation'' means that the reforms must be fast and drastic, arguing that there was ''no room for gradualism.'' In later statements, Milei asked Massa and the outgoing Argentine government to stay in power until the constitutionally mandated inauguration day on Dec. 10, amid rumors of an early transfer of power to the new government. 

Despite his campaign rhetoric, Milei will struggle to implement structural reforms due to his party's small presence in Congress. The new Milei government will have significant popular and political legitimacy, as the president-elect defeated his rival by around 12 points and won in all but three of Argentina's 24 electoral districts. However, Milei's party, Freedom Advances, will control only 38 of the 257 seats in the Congress of Deputies and seven out of 72 seats in the Senate. While the conservative Together for Change coalition has promised to support Milei, the coalition is internally divided and not all of its members will vote alongside Freedom Advances. This means that Milei's government will need to negotiate every single law with the opposition, which will prove a significant challenge considering Argentina's political polarization, in which the government and the opposition rarely cooperate. Milei could try to pass some of the reforms via decree, but the Argentine constitution gives both Congress and the judicial branch the power to block presidential decrees. This means that the new government will struggle to implement most of his reforms, at least until the midterm elections in 2025.

Milei's legislative constraints mean that an official dollarization is unlikely in the short-to-medium term, while inflation will remain very high. On Nov. 20, Milei insisted that he would fulfill his promises of closing Argentina's central bank and dollarizing the country's economy. However, his legislative constraints make it virtually impossible to pursue these plans anytime soon. To replace the peso with the U.S. dollar, Argentina would need to pass a law in Congress, which is almost impossible with the legislature's current composition. Moreover, dollarization would also likely require a constitutional reform, for which two-thirds of the votes in the Chamber of Deputies and the Senate are needed. On the campaign trail, Milei said he would circumvent these obstacles by holding a referendum on the issue of dollarization, but organizing such a referendum would also require passing a law in Congress. This means that only a robust performance by Milei's Liberty Advances party in the midterm elections would increase the likelihood of a dollarization law or referendum. But even if Milei manages to secure Congressional support before the midterms, there are open questions about whether dollarization would be feasible in the short-to-medium term, given that Argentina's central bank has virtually no U.S. dollar reserves it can use to replace the billions of pesos currently in circulation. 

• Even if dollarization is not feasible in the next few months, Milei's victory has severely increased political and economic uncertainty in Argentina due to his status as an untested president with no political experience leading a very small party. This, combined with the fact that his rival Massa injected billions of pesos into the Argentine economy throughout 2023 to boost domestic consumption and increase his electoral chances, means that inflation will remain very high in Argentina in 2024. On Nov. 20, Milei admitted that it would take his government ''between 18 and 24 months'' to lower inflation ''to international standards.''
• A scenario of hyperinflation (which is possible in 2024) would increase the possibility of dollarization in at least two ways. For one, the rapid spike in consumer prices would significantly increase pressure on lawmakers in Congress (including opposition politicians) to respond by approving a dollarization law. Hyperinflation would also further weaken the value of the peso vis-a-vis the U.S. dollar, thus reducing the amount of dollars that the central bank would need to replace the pesos circulating in the economy. However, a scenario of hyperinflation would almost certainly also involve severe social unrest, which could force the Milei government to resign before dollarization happens. 
• Short of an official dollarization, the Milei government could endorse the use of U.S. dollars for day-to-day transactions in the hopes that, over time, Argentines would abandon the peso to make the dollar the de facto currency, including for private-sector salaries (in fact, most real estate transactions in Argentina already take place in dollars). This kind of ''unofficial'' dollarization has taken place in Venezuela in recent years, where the government tolerates the use of dollars and a large number of private sector salaries are paid in the U.S. currency. 

Given these constraints on dollarization, Milei will likely instead initially focus on de-regulation and spending cuts to advance some of his political agenda, but this will likely spur significant social unrest. Unable to move forward with his dollarization plans, Milei will probably prioritize spending cuts to reduce Argentina's fiscal deficit (which is currently at around 2% of GDP), as well as eliminating red tape to make the Argentine economy more attractive to foreign investors. In fact, Milei has promised to drastically reduce the number of ministries in the Argentine government, stop hiring new state employees, progressively replace permanent welfare payments with time-limited unemployment benefits, and lift subsidies for electricity, natural gas and public transportation (this latter point is particularly problematic, as a quick lifting of subsidies will make all of these services more expensive, further fueling inflation). Milei can enact most of these policies via executive decisions that don't require support from the legislature. Spending cuts will also likely help Argentina restart dialogue with the International Monetary Fund, which could continue disbursements for the country to reward Buenos Aires for its fiscal responsibility. However, actual spending cuts, as well as the prospect of eventual spending cuts, will anger the millions of Argentines who receive monthly welfare payments and benefit from the state's generous subsidies. Against this backdrop, protests, demonstrations and roadblocks will likely remain frequent in the foreseeable future. Milei's campaign pledge to crack down heavily on protesters blocking roads could result in clashes with the police, some of which could turn deadly. Heightened social unrest amid very high levels of inflation could eventually destabilize the government and increase the risk of an early general election.

• While spending cuts will be the primary catalyst for protests, other elements of Milei's political and social agenda will also result in social conflict. For example, the incoming government has promised to abolish abortion. While this would require a new law being passed by Congress (where Liberty Advances lacks a majority), the mere prospect of an abortion ban could trigger protests among Argentina's large pro-choice groups. Milei, and particularly his vice-president-elect Victoria Villaruel, have also minimized the crimes committed during Argentina's last dictatorship (1976-1983), so similar rhetoric will likely see human rights groups stage protests against the Milei administration as well.

If the Milei administration manages to stabilize the economy and keep social unrest within tolerable levels, his pro-business agenda will create significant opportunities for domestic and foreign investors. If Argentina's new government survives what will be a very complex first two years in office, its pro-business agenda will create substantial opportunities for private investors in a market of more than 45 million people. Milei has promised to increase the presence of the private sector in all parts of the Argentine economy, including infrastructure projects and the country's healthcare, education and pension systems. Moreover, he has promised to privatize some of Argentina's main state-owned companies (including energy giant YPF) and to reduce taxes for private companies while also making it cheaper for them to hire and fire workers. As with dollarization, some of these plans (especially privatizations) require Congress to pass legislation, which will prove difficult before the midterm elections. Still, Argentina's previous neo-liberal experience in the 1990s led to a significant increase in foreign investment and economic opportunities for the private sector, which could happen again if Milei's incoming government manages to stay in power long enough to see its proposals through.

• During his presidential campaign, Milei promised to formally sever relations with China (due to its Communist government) and Brazil (due to its left-wing government), while aligning his government closer to the United States and Israel. Under Milei, Buenos Aires will likely have colder diplomatic and political ties with Beijing and Brasilia, the severing of trade ties is highly unlikely because China and Brazil are Argentina's top two export destinations. For the same reason, Argentina is more likely to push for a reform of the Mercosur trade bloc (of which Brazil, Uruguay and Paraguay are also members) to make it less protectionistic than outright exiting it. Still, Argentina may withdraw its candidacy to join the BRICS (of which both China and Brazil are members) in January to send a political message. This would have only modest immediate repercussions as BRICS is mostly a forum of discussion with little economic impact.