ANALYSIS · Latin America

The Argentina economy under Milei: what an owner should weigh before investing

Inflation has fallen and the budget is balanced, but the peso, thin reserves and a coming election still decide whether a new commitment in Argentina pays back.

Rendal Post Analysis Desk · Published October 2, 2026

For a company deciding whether to put capital into Argentina, the useful question is no longer whether Javier Milei's stabilization worked. On the official numbers it largely did: annual inflation dropped from more than 200 percent in late 2023 to about 32.5 percent by early 2026, according to IMF staff. The harder question, in our reading, is whether the conditions that make an investment pay back have caught up with that headline: a predictable exchange rate, reliable access to dollars, steady domestic demand and a political calendar that does not threaten to rewrite the rules. The sources suggest they have caught up only in part, and that gap is where an owner's risk now sits.

What the stabilization delivered

Milei's government took office in December 2023 with annual inflation in triple digits, and its central bet was fiscal. IMF staff now count back-to-back primary surpluses, a run the country had not managed in close to twenty years, with the federal primary surplus at 1.4 percent of GDP in 2025 and an approved 2026 budget implying roughly 1.5 percent. The same report puts primary spending at 14.6 percent of GDP, its lowest level in more than two decades. The cost was real: the Congressional Research Service notes that the administration nearly halved the number of federal ministries and cut tens of thousands of public sector jobs.

Growth came back after a hard first year. The IMF's tables show real GDP shrinking 1.3 percent in 2024, expanding 4.4 percent in 2025 and projected at 3.5 percent for 2026. Outside validation has followed: the Fund records that Fitch raised Argentina to B- from CCC+, its highest rating since 2019, and that lawmakers approved the budget along with the Fiscal Innocence Law and the Labor Modernization Law after the October midterms. In our reading, that legislative record matters to an investor as much as the macro data, because reforms passed by Congress are harder to reverse than decrees.

Inflation is slower, not solved

The latest reading is the best in more than a year. INDEC reported monthly inflation of 1.7 percent in August, the lowest in 14 months, with prices up 33.5 percent over twelve months and 21.3 percent so far in 2026. The path has not been smooth: IMF staff note that monthly headline inflation climbed to 3.4 percent in March 2026, and the Fund described disinflation as having stalled before it resumed.

The detail beneath August's number is what a pricing team should study. BBVA Research found core inflation stuck at 1.8 percent month on month, or 32 percent year on year, the same as July, while the Buenos Aires Times reported regulated prices rising 2.2 percent, led by electricity, gas, public transport and private healthcare. BBVA keeps its 2026 forecast at 29 percent, with a slight upward bias, above the roughly 25 percent end-2026 figure in the IMF baseline. Milei had promised a monthly rate that would start with "a zero" by August 2026, a goal the paper says even optimistic forecasts push well into the following year. In our reading, any contract, lease or supplier agreement signed now still needs indexation built in, because the sources describe a slowing trend, not a finished one.

The peso, the band and the dollars

Currency policy has changed shape several times. CRS describes a sharp 50 percent devaluation in December 2023, a controlled crawl of 1 to 2 percent a month, and from April 2025 a band within which the peso could move. The band now widens with realized inflation, and according to the IMF staff report, a daily purchase program had let the central bank buy around US$7.5 billion by early May 2026, while the peso had appreciated roughly 13 percent in real terms since end-2025. In our reading, a stronger real peso helps importers and anyone paying dollar debt, and squeezes margins for an exporter with local costs.

Reserves remain the weak point. At program exchange rates, net international reserves ended 2025 some US$10 billion below the IMF floor, and central bank governor Santiago Bausili said the Fund had granted a waiver after the missed targets. An AP report carried by Fortune said reserves "still run perilously low", and CRS adds that most of what the central bank holds in foreign currency is matched by what it owes in foreign currency, and that the country lacks a strong trade surplus to bring dollars in.

On capital controls, the direction is toward opening, but the job is unfinished. The IMF notes that limits on paying dividends were eased from January for last year's profits, yet the same document shows Argentina asking for approval to keep its remaining exchange restrictions and one multiple currency practice, and records that cross-restrictions between official and parallel markets persist. That suggests a foreign owner can expect better repatriation than two years ago, without treating it as guaranteed.

What Washington's support did and did not do

On October 9, 2025, Treasury Secretary Scott Bessent announced a $20 billion swap line for Argentina's central bank, funded through the Exchange Stabilization Fund. CRS stresses that neither government disclosed the specifics, including duration, and that by the end of October the central bank had swapped pesos for $2.5 billion under the line. CRS also writes that President Trump appeared to tie the support to a good result for Milei's coalition in the midterms, where the coalition outperformed some pollsters' expectations, setting off a market rally.

The draw was short-lived. IMF staff report that in late December 2025 the activated US$2.5 billion was repaid by tapping a matching swap line from the Bank for International Settlements, and in January Bessent said Argentina had "quickly and fully repaid its limited draw". The IMF's own view of swap lines is cautious: support from them "should not be a substitute for required macroeconomic adjustments", staff wrote. Argentina also remains the IMF's largest debtor and has drawn US$15.8 billion of its US$20 billion program. In our reading, the US line was a bridge across an election, not a standing backstop a business plan should count on.

Where the opportunity and the risk sit

The recovery is concentrated. INDEC data showed manufacturing output down 4.9 percent year on year in July, with 12 of 16 manufacturing divisions declining, and the IMF describes construction and manufacturing trailing the primary and financial sectors. The central bank's analyst survey cut its 2026 growth forecast from 2.7 percent to 2.1 percent, well below the Fund's projection. Unemployment reached 7.5 percent at end-2025, and real credit to the private sector has stagnated since the third quarter of 2025 as bad loans rose.

The other side of the ledger is investment. IMF staff count projects approved under the RIGI and RMI investment regimes totaling about US$28 billion, concentrated in energy, mining, agriculture and the knowledge economy, and they note that the new labor law lowers dismissal costs and decentralizes collective bargaining. The Fund also names the main domestic risk plainly: political uncertainty ahead of the 2027 presidential election could trigger capital outflows and slow or reverse reforms. IMF Managing Director Kristalina Georgieva's own advice to the government applies just as well to a board: "agile policy-making and contingency planning remain essential".

What to do with this

First, judge the sector before the country. If your business sells into energy, mining or agriculture, the sources describe genuine tailwinds; if it depends on domestic manufacturing or household credit, the same sources describe weakness that, in our reading, argues for patience.

Second, build the currency into the model rather than the footnotes. Stress-test returns against a move toward the top of the band and against a reversal of the recent real appreciation, and keep indexation in local contracts until monthly inflation is clearly lower and core prices follow.

Third, treat getting money out as a variable to negotiate, not an assumption. Confirm with local counsel what the remaining exchange restrictions mean for your dividend and loan flows, and favor structures where dollar revenue and dollar obligations sit together.

Fourth, stage commitments around the political calendar. A phased investment with decision points before the presidential vote costs some speed but preserves the option to wait if the reform path wobbles.

Finally, watch a short list of signals: the monthly INDEC print and its core component, the central bank's reserve purchases, and the outcome of each IMF review. If those keep moving the right way, the case for Argentina strengthens on evidence rather than on promises.