Milei’s Chainsaw Fails to Cut Public Debt, Soars to $460.934 Billion

Argentina’s public debt continues to rise despite the ongoing budget cuts implemented by Milei. As of January 2026, the gross public debt of the Central Administration reached $460.934 billion, an increase of over $5.8 billion in just one month. This surge is attributed to the capitalization of interest and inflation indexing, while the real economy shows signs of deterioration with the loss of nearly 22,000 businesses and more than 290,000 jobs during two years of libertarian governance.

The gross public debt of Argentina’s Central Administration registered a new increase in January, closing the first month of 2026 at $460.934 billion, according to the latest official report from the Treasury Secretary. This increase of $5.867 billion from December occurred during a period of substantial debt repayments, highlighting the burden of interest payments and inflation adjustments on the state finances. This situation is particularly striking given that it comes in the context of a government that promised to reduce public spending through deep cuts, symbolized by the «chainsaw» that Javier Milei turned into a political brand.

The official report indicates that the monthly increase was primarily due to the capitalization of interest and inflation adjustments affecting peso-denominated securities. This new figure signifies that the country’s debt has risen by over $35 billion since November 2023, when it was below $426 billion. This sustained growth contradicts the official narrative of orderly public account management and highlights the structural complexity of the debt issue, regardless of the government’s fiscal tightening intentions.

Despite the constant growth in liabilities, the Treasury document clarified that nearly all of the national debt is in a state of normal payment. The January figure confirms the upward trend of the past months and establishes the debt as one of the main macroeconomic challenges for the far-right administration.

The normal payment situation, however, does not prevent the total debt from continuing to rise, fueled by automatic mechanisms that escape political decisions aimed at reducing spending.

Hidden Mechanisms Behind Debt Growth

Regarding the technical reasons for the increase, the Treasury Secretary noted that the variation arose from factors that do not involve immediate cash outflows. The adjustment of CER-indexed instruments added $3.410 billion to the total stock, while the capitalization of interest on bonds and notes contributed another $3.171 billion.

These accounting movements increased the final amount, even though the Treasury made capital and interest payments exceeding $18 billion during the month. In other words, the government allocated a significant amount of resources to meet obligations, yet the total debt still rose due to the combined effects of inflation and accruing interest on capital.

As for the composition of creditors, the stock with international organizations reached $97.095 billion at the end of January. This figure represents a substantial part of the total debt, positioning multilateral organizations as central actors in the country’s financial structure.

According to Misiones Online, the International Monetary Fund (IMF) remains the largest holder of these commitments with $57.744 billion, followed by the Inter-American Development Bank and the World Bank.

“This structure of external financing coexists with a maturity calendar that will see its most demanding peaks in April and July, moments when the government will need to demonstrate its capacity to refinance payments without resorting to new borrowing that might exacerbate the situation,” warned the digital outlet.

Understanding Public Debt: What It Is and How It Works

Public debt refers to all financial obligations that the state undertakes to cover the gap between its revenues and expenditures. This liability is divided between loans obtained from external creditors and international organizations, usually in foreign currency, along with obligations incurred within the local market.

When tax revenues are insufficient to cover state operations, the Treasury turns to debt as a source of immediate liquidity. In Argentina’s case, this practice takes on particular conditions due to persistent inflation and exchange rate volatility.

“The rise of the stock does not solely respond to the taking on of new loans; it is self-reinforcing through the dynamics of interest and inflation. In the Argentine economy, interest capitalization—where unpaid charges are added to the original capital—and CER adjustment clauses transform debt into an expanding accounting entity. This phenomenon leads to the total amount increasing even during periods when the government manages to cancel capital due dates, due to the indexing required by bondholders in response to price hikes,” Misiones Online reported.

The situation observed in January 2026 perfectly exemplifies this dynamic: the Treasury paid over $18 billion, but Argentina’s debt rose by nearly $6 billion.

Managing this financial burden becomes a central constraint for economic policy, as it forces the government to continuously renegotiate terms to avoid defaults. The process of “rolling” the debt, based on issuing new securities to cancel old ones, allows for sustaining financial function but places the country in a scenario of direct dependence on market confidence.

Thus, the volume of consolidated gross debt serves as the primary barometer of state solvency and long-term macroeconomic stability. Each new record in total debt, as occurred in January, raises alarms about future repayment capacity and the sustainability of the entire financial scheme.

The Other Side of Milei’s Chainsaw: Business Destruction and Job Loss

The “chainsaw” that Javier Milei turned into a political brand today reflects in hard numbers from the Argentine state itself. Official figures published by the national government estimate that over the past two years, 22,000 businesses and 290,602 jobs have been lost, a blow that—according to a report from Página/12—has left most of the private sector with less employment and thousands of families burdened with uncertainty. The contrast between the promise of fiscal order and the actual results in terms of economic activity is becoming increasingly difficult to reconcile for the libertarian government.

The report from the Superintendence of Labor Risks (SRT) details that between January and November 2025, the net loss of employers reached 9,722, a figure similar to that recorded in 2024. The pace has not slowed: in November 2025 alone—the last month accounted for—892 firms shut down. These figures reflect a consistent trend of contraction in the business sector, which shows no signs of recovery despite official announcements about a supposed economic reactivation. The destruction of businesses not only leads to job losses but also erases productive capabilities, commercial networks, and know-how that took years to build.

11 Out of 14 Private Sectors Experienced Job Loss

The deterioration is not concentrated in a single sector. Of the 14 private sectors analyzed by the SRT, 11 recorded declines in employment, particularly affecting activities that typically generate formal work. In other words, the once-promising sectors have suffered a severe downturn. The widespread nature of this phenomenon indicates that it is not a matter of specific sectoral problems but rather an adverse macroeconomic dynamic affecting the entire Argentine productive framework.

Based on the official document, the Center for Economic Policy (CEPA) summarized the situation with a striking statement: “30 companies closed per day, reflecting a negative trend within the business fabric during this period.”

The figures from the labor risk system illustrate the regression: in November 2023, there were 512,357 employers and 9,857,173 workers; by November 2025, those numbers decreased to 490,419 businesses and 9,566,571 employees. The net result over this period was 21,938 fewer employers and 290,602 fewer workers. These precise figures represent real family dramas: households losing their sources of income, disrupted professional projects, and communities facing reduced job opportunities.

According to official data released by the Argentine government and collected by the Superintendence of Labor Risks (SRT), nearly 22,000 employers and over 290,000 jobs were lost in two years. The simultaneous occurrence of these phenomena alongside the constant increase in public debt paints a complex picture: on one hand, the government accumulates liabilities that jeopardize the future; on the other, the real economy contracts, shrinking the productive base that should generate the resources to meet those obligations.

Sectors Most Affected by the Recession

The most affected activity, according to the report, was construction, which shifted from growing 3.4% annually (2003-2008) to declining by 1.3% in 2024. This sector, traditionally labor-intensive with strong multiplier effects on other activities, faced a contraction reflected in stalled works, suspended workers, and the closures of small businesses related to materials supply or architecture and engineering services.

Following closely is the manufacturing industry, another classic job engine. According to data from Indec cited in the report, the industry plummeted 3.9% in December, marking six consecutive months of decline in a context characterized by devaluations and a loss of purchasing power.

Although agriculture, commerce, and fishing showed positive variations, they are insufficient to compensate for the overall contraction: historically, they require less employment and do not stimulate the internal market in the same way.

The paradox arising from these data is evident: while Milei’s government applies a chainsaw approach to public spending, debt continues to grow driven by automatic mechanisms of indexing and interest capitalization. Simultaneously, economic activity contracts, businesses close, and jobs are lost, reducing the tax base that should fund state coffers. This vicious circle raises questions about the sustainability of the adjustment model in a recessionary context.

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