Milei’s $16 billion headache

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Javier Milei was on a winning streak.

Now, it's becoming increasingly difficult for him to avoid the elephant in the room: a $16 billion court judgment against Argentina that his government can neither afford to settle nor duck for much longer.

Since taking office 18 months ago, the libertarian president has refused to negotiate with Burford Capital, the litigation firm representing minority shareholders affected by the nationalization of oil company YPF in 2012 under a previous administration.

But the same US federal judge who found in favor of Burford in 2023 yesterday ordered Argentina to transfer its controlling stake in YPF to the plaintiffs.

Argentina clearly can't pay. It's barely accumulated enough foreign reserves to meet targets agreed with the IMF for the release of $20 billion in loans. And Milei can't hand over YPF shares without congressional approval either.

YPF signage at the New York Stock Exchange on April 11. Photographer: Michael Nagle/Bloomberg

The president said he'll appeal the decision. What's clear is that it's becoming one of the biggest headaches he inherited from previous Peronist governments, threatening to derail the positive investment case he's been building for the country.

Under Milei's watch, the economy has started to grow, inflation is easing and the state has eliminated some currency and capital controls.

Cristina Fernández de Kirchner, the former president whose specter has always scared off investors — she was in office during YPF's nationalization — is now under house arrest for a corruption conviction.

Yet all will be in vain if Argentina fails to attract foreign capital to sustain the positive trajectory.

The Burford case puts both goals at risk: it hinders the government's ability to sell global bonds under New York law, and raises questions about what legal guarantees investors would face in Argentina.

For now, Milei is taking a page from his predecessors' playbook and kicking the can down the road. — Patrick Gillespie

Milei in Buenos Aires on April 2. Photographer: Tomas Cuesta/Getty Images

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