The wave of reforms does not stop

Argentina has a wave of significant reforms ahead. The first was characterized by a strong fiscal adjustment in 2024, where the country went from a fiscal deficit of U$S 26.861 billion for the 12 months to November 2023 to a fiscal surplus in January 2025. The fiscal result as of May 2026, for the last 12 months, is a surplus of U$S 1.114 billion. A true feat, moving from deficit to surplus in such a short period allowed inflation to drop sharply from 289.4% annually in the early months of 2025 to 32.3% annually by June 2026.

In 2025, monetary policy was consolidated, and Argentines were looking to protect their savings and bought U$S 50 billion, the Central Bank met the needs of savers, who could buy the dollars they wanted without restrictions. This was not free, the Government supplied the market with dollars, but operated very strongly in the futures market, bonds, and raised interest rates significantly, which deteriorated the financial health of SMEs.

In 2026, when it seemed everything was heading towards a calmer scenario, the war between the United States and Iran caused oil prices to double, which brought about a sharp increase in fuel prices, pushing inflation up. The Central Bank acted as a true guarantor of stability and did not issue pesos in that context, which meant companies could not validate rising prices, resulting in a significant loss of profitability in their balances. On the other hand, the rise in oil prices allowed the country to boost its exports, the dollars that came in appreciated our currency.

Economic agents in Argentina are not accustomed to this type of crisis, where there is no devaluation, but rather an appreciation of their currency, demonstrating that the country is antifragile; an external shock, far from making it vulnerable, enhances its growth capacity. Once again, those who bought dollars were left with nothing.

The financing needs in the 29 months prior to Javier Milei's assumption were negative by U$S 16.227 billion, while now the balance is positive by U$S 14.146 billion, an improvement of U$S 30.373 billion.

What’s coming! What’s coming!

Once the war is over, the price of oil fell like a piano, decreasing from U$S 120 to U$S 70, which implies that at some point in the next 60 days the price of fuels will start to drop. Diesel went from $ 1,600 to $ 2,300, the drop will impact the price index, and we even have the possibility that in some month of the second half the price index will start with 0.

The drop in oil prices will lead to a decrease in dollar income, and with the arrival of winter vacations and the World Cup, there is a seasonal demand for the exchange rate that will likely place the dollar at a much higher value than in the first half, without being something serious; in December 2025 it ended at $ 1,457, and today many are surprised by the significant rise in recent weeks, ending at $ 1,500.

The Ministry of Economy is working with an eye on the year 2027, of the total debt in pesos, 40% matures after the presidential election. The dollar-denominated debt would be fully financed for 2027; in the coming weeks, the Government would take on debt from a group of banks against guarantees from international financial organizations, renew a debt constituted in repos, and there is talk of a new agreement with the IMF that clears the horizon of maturities.

Covering the maturities of 2027 will reduce volatility in inflation and the exchange rate in 2027.

On the other hand, the Central Bank honored the debt it had with China and now has a swap of U$S 18 billion to use if circumstances warrant; it also has a swap of U$S 20 billion with the American government.

As if all this were not enough, the BCRA has the experience of having countered the run of 2025, with intact firepower in the futures dollar market, issuance of bonds tied to the wholesale dollar, and can tighten liquidity to discipline the dollar with interest rates. The monetary circulation amounts to the equivalent of U$S 18 billion, little money in circulation, the lethal weapon to curb the appetite of evaluators.

Main conclusions

• The best months for the Argentine economy are coming, the hardest work (which was the fiscal adjustment) has concluded. Therefore, we do not see the GDP suffering in this new phase, we expect a growth of 3.5% for 2026, and 5.0% for 2027.

• The Central Bank has done a meticulous job, on one hand, cleaning the entity's liabilities of Pases, Lefi, Leliq, franchises, puts and obscene amounts of pesos that only distorted the relative prices of the economy. On the asset side, we see a process of reserve recomposition; the Central Bank has already bought more than U$S 30 billion since Javier Milei took office, and more than U$S 11 billion in 2026. With a robust asset, cleaned liabilities, and few pesos, inflation and a stable exchange rate are assured.

• In recent months, the country has improved its ratings from CCC to B-, which has driven Argentine bonds up. On December 10, 2023, the date Javier Milei took office, the country risk was 1,923 points; it is currently at 417, a decrease of 78.3%.

• This year the country will export around U$S 100 billion; there are RIGI projects (Incentive Regime for Large Investments) presented for over U$S 100 billion and approved for U$S 27 billion. We are running a fiscal surplus, reserves close to U$S 47 billion, and a strong influx of financing to companies and provinces that reached U$S 30 billion since the beginning of the government, plus the credits provided by the IMF and international organizations amounting to U$S 19.686 billion in the same period. In summary, Argentina has an abundance of dollars and a shortage of pesos; the economy is entering a phase of recovery and expansion that will be unprecedented in the country's history.

• If the system consolidates, and Javier Milei is re-elected, we must not overlook that by 2028 the restrictions will be a distant memory, the reduction of export taxes would accelerate, and we will be closer to tax and labor reform that will allow the country to achieve better ratings and a country risk below 300 points.