I would like to begin with an idea we often highlight in meetings with international investors, but tend to overlook amid the local whirlwind: Argentina is implementing one of the most ambitious economic reform and stabilization programs in recent global history.
These programs are driven by the commitment of President Javier Milei who, guided by moral conviction rather than political interest, has consistently prioritized measures aimed at fostering development and prosperity for Argentina and its people.
His commitment and moral conviction are the foundation of the economic team mandate, a mandate reaffirmed by society in the October election. With strengthened governability and solid macroeconomic conditions, we are now able to pivot at a new turning point and project a growth path that just few thought possible.
After two years of marked improvement in the fundamentals, our main challenge today is more psychological than technical: the seed of negative expectations. Decades of failed attempts have ingrained a structurally pessimistic bias in expectations, delaying the impact of our measures and intensifying the demands for immediate results. Expectations continue to be shaped by decades of abuse—particularly the monetary abuse inflected on society.
That is why we have adopted an extremely conservative approach: building credibility step by step. We will take a step forward when we consider that the risk of taking two steps back is very low. A single mistake may cost us all the efforts made so far. Before taking a decision, we assess operational and implementation risks, no matter how appealing the underlying principles may seem.
Our direction is well-defined.
After two years, the economic course is unequivocal: greater freedom, fewer restrictions, and lighter regulations. Operational and implementation risks sometimes enable us to move forward more quickly; other times more cautiously, but we never doubt the direction we are heading.
A clear example is the ongoing debate on the exchange rate regime and reserve accumulation. The very existence of this debate marks a substantial improvement: the debate now centers on speed and degrees of freedom not on the direction to move forward. We are discussing how much and when we will allow currency to float freely. The discussion has shifted towards the analysis of the technical aspects of each alternative implementation. On the one hand, there is the desire and urgency to complete the transition towards a more market-driven economy, and on the other, there are technical factors such as liquidity and the structure of the foreign exchange market. We complement this with an analysis of the unique dynamics of our foreign exchange market and the literature on safe assets which suggests that, in a market like ours, the factors that would typically act as stabilizers actually work as destabilizing factors.
Time is on our side: each day the fiscal surplus grows as the State steps back to allow the private sector to do its part. Nevertheless, we must continue to seize opportunities to move forward and reinforce the foundations of the path ahead.
The program we launched in December 2023 reversed the traditional sequence of stabilization programs: we first tackled the fiscal deficit. Fiscal adjustment is usually gradual. However, this adjustment, once thought impossible, unsustainable, and even recessionary, was accomplished. Today, fiscal balance is a social asset, as valuable as any acquired right.
On the foreign exchange front, we must not forget our starting point: we inherited a system with USD13 billion in deposits, USD11 billion in minimum reserve requirements at the BCRA, USD50 billion in debt from unpaid imports, and zero cash on hand. Today, our banking system is at a historic high: deposits in dollars have reached USD35 billion, loans granted in dollars are virtually nearing their historical peak of USD18 billion, and the BCRA holds enough reserves to fully meet the banks’ minimum reserve requirements. Foreign trade flows have returned to normal.
We have moved from correcting inherited imbalances to normalizing the economy and relaxing regulations. This ultimately enabled a transition to a floating exchange rate regime, characterized by minimum restrictions and a clear path toward full liberalization, as the bands widen and regulations—such as the distribution of dividends by multinational companies—take effect as of fiscal year 2025.
The bands—initially set at an exceptionally wide range of 40% compared to similar regimes—played a crucial role in anchoring expectations during the transition to a system based on monetary aggregate targets. It is essential to provide support during the transition from a nominal exchange rate anchor to a more complex one, such as monetary aggregates. This will take some time. Our ultimate objective is clear: a floating exchange rate and currency competition.
This is a clear example where the balance of risks led us to prioritize the implementation of some restrictions over the principle of economic freedom we aim to achieve.
The next stage of the exchange rate and monetary policy must align two objectives: fostering monetary balance to reduce inflation, and further strengthening the BCRA’s balance sheet through reserve accumulation.
These two objectives are fully compatible given our current position: an economy with room for remonetization and a central bank that no longer has remunerated liabilities to settle.
The key is to stay focused on the core objectives of the economic stabilization program: achieving sustained economic growth and reducing inflation. Reserve accumulation will be an outcome of the program’s success, not its driving force.
This pattern has been observed in all successful stabilization programs.
Reserve accumulation is a valid metric for assessing the success of the stabilization program but it must not be mistaken with the ultimate objective. The objective of the program should not be the accumulation of international reserves at any cost, especially if doing so risks undermining economic stability.
Therefore, the path forward lies in the remonetization of the economy, which currently stands at 50% of its historical level. In the past two years, this remonetization has been reflected on a monetary base that increased from 2.5% to 4.5% of GDP, in a context of declining inflation. The increase in the monetary base was driven by two factors: record purchases of international reserves totaling nearly USD30 billion and the reduction of remunerated liabilities (which used to be four times the monetary base and are now zero).
If the Treasury regains access to the capital markets, the BCRA will no longer need to provide reserves to face payments, and remonetization will be directly translated into international reserves accumulation.
What we must avoid is forcing the pace: reserve accumulation should follow the remonetization process, not the other way around.
In the debate over reserve accumulation, some seek to achieve it through the current account. This is not what we anticipated at this stage: Argentina still remains among the most closed economies in the world. We export natural resources whose supply is largely inelastic to the exchange rate, while more than 85% of our imports are intermediate goods, which are more sensitive to economic growth than to the exchange rate.
Sustainable reserve accumulation at this stage—until our productive structure evolves—will occur through a virtuous cycle of development, not through an artificially high real exchange rate that signals a depressed economy. An expanding economy will likely exhibit a current account deficit financed through the capital account, provided that fiscal balance and confidence remain intact.
To conclude, I would like to share a few remarks on the financial system that has undergone structural reforms over the past two years while navigating significant changes in the economy’s nominal framework. Commercial debts of importers were settled; price controls, lifted; artificial caps on interest rates and compulsory lending, removed; utility rates, adjusted; and the rental market, liberalized—among other measures. Today, the price system reflects supply and demand, serving as a catalyst for the efficient allocation of resources.
Meanwhile, Argentina continues to maintain a higher number of financial institutions compared to other countries with similar economies. With lower inflation and ongoing deregulation, operational efficiency will become increasingly critical. In the future, it will be essential to achieve a specific scale or focus that serves as a source of efficiency. We anticipate consolidation within the industry and the arrival of new competitors that will accelerate these processes.
Over the past eighteen months, credit to the private sector has doubled in real terms and could potentially double again before reaching historic highs. We expect the expansion cycle, which slowed before the elections, to resume and accelerate from November onward.
In recent months, the delinquency rate has increased, though it remains within our expected range. The increase in the delinquency rate is partly explained by the historically low starting point; after all, if there is no credit, there can be no default. Both parties, debtors and creditors, are once again learning how to receive and grant credit. For creditors, inflation always absorbed the final installments of loans in pesos, but that era is over. Banks are rebuilding their customer databases and credit histories. This cycle of credit expansion features new technologies and new credit originators from the Fintech sector. In all cases, this activity has significant growth potential, and we expect it will generate strong capital demands from mid-2026.
Our ultimate goal is crystal clear:
– A stable economy that grows with predictability.
– A reliable currency, and genuine currency competition.
To achieve this:
– We will maintain fiscal balance.
– We will strengthen the BCRA’s balance sheet anchored in reserves.
– We will move towards a less regulated and more liberalized economy.
Thank you.
