Following the speech, a PDF version is available, along with a related presentation (on the consolidation of the stabilization program) also in PDF.
Acknowledgement
Good morning. I want to thank the IAEF for the invitation to this 43rd Annual Congress and for the opportunity to share, once again, the perspectives of the Board of the BCRA with the audience.
This is the third consecutive edition in which I participate. As in previous opportunities, I once again share the BCRA’s assessment with the expectation that it will be useful to navigate and take advantage of Argentina’s profound economic transformation led by President Javier Milei, which was widely supported by society in last year’s legislative elections.
I. Introduction: Launch, transition and consolidation
In my participation at the 41st IAEF Congress in 2024, I sought to clarify the objectives of Stages 1 and 2 of the stabilization program, and to project a way out of a problem with so many economic dimensions. The central question was whether Argentina could stabilize without falling into the shortcuts of past programs, which ended in inflationary erosion, deposit freezes, debt restructurings, and recurring maxi-devaluations. The answer we offered from the BCRA was affirmative.
Seeking to consolidate stability and restore credibility meant aligning macroeconomic pillars in a consistent, though not necessarily obvious, sequence. The strategy was not conventional. But it is precisely for that reason that it was proving effective: sharp fiscal adjustment to end fiscal dominance, reduction of interest rates to address monetary overhang, transfer of liabilities to the Treasury to stop monetary issuance, financial engineering to handle private commercial debt and avoid a collapse in activity, and implementation of a crawling exchange rate to initially provide an anchor of predictability in a highly dollarized economy.
At the 42nd Congress in 2025, I found it appropriate to share the assessment that stabilization was proving successful but that we were in a year of transition. Having carried out the “controlled demolition” of the previous economic regime, the main task of Stage 3 was to lay the new foundations to “build opportunities.”
Stage 3 had begun with exchange rate unification and the relaxation of currency restrictions, and would later be completed with the elimination of the monetary policy rate. These measures defined the monetary aggregates control regime as the sole nominal anchor. The regime was different from the inflation-targeting paradigm that prevails today in already stabilized economies with efficient interest rate transmission mechanisms.
But its value lay in the fact that it had been useful in successful precedents such as Peru and Israel, which had implemented it for contexts of high inflation similar to the levels observed in Argentina. Certainly, a year ago in this forum we could not anticipate that electoral uncertainty would escalate to the level it did and lead to a process of extreme dollarization, equivalent to 50% of M2.
However, having gone through such acid test, today we can recognize the true consistency and strength of the program. It also allows us to appreciate the political conviction to support the program, unlike past electoral years when short-term convenience always led to fiscal and monetary relaxation.
On this occasion, the message I would like to share in relation to Stage 4 of the program is one of consolidation of the economic course, free of conflicts between economic policy objectives and also free of external imbalance. It is true that the economy is still absorbing a significant geopolitical shock—the conflict in the Middle East and its impact on global commodity markets.
However, it is doing so from a very sound external position. For the first time, the Argentine economy preserves its domestic financial stability without requiring adjustments in economic policy, unlike most emerging economies.
The observed stability is no coincidence. It is the result of macroeconomic consistency and a framework of domestic price flexibility and trade integration which have begun to guide the allocation of resources in the only way that is sustainable in the long term.
Today I would like to examine three issues:
– First, the progress made in Stage 4 of the program, with particular emphasis on external balance;
– Second, the major advances in cleaning up the BCRA’s balance sheet, highlighting how this contributes to anchoring inflation expectations; and
– Third, the forward-looking strategy of the BCRA in monetary, foreign exchange and financial matters.
II. Stage 4 of the program: Macroeconomic progress
Starting with the macroeconomic progress of Stage 4, four aspects of the current situation should be highlighted.
1- External balance and its unprecedented contribution to financial stability.
2- Changes in relative prices that affected the CPI but do not lead to inflation persistence.
3- The dynamics of activity, led by exports and accompanied by consumption, which is about to receive the boost of investment.
4- Changes affecting marketing channels, equilibrium margins, and financial intermediation.
1. External balance brings financial stability
The international scenario of the first quarter of 2026 was not benign. The conflict in the Middle East reignited upward pressures on global inflation, raised international interest rates, and increased the volatility of the US dollar. Emerging economies, as a whole, faced more adverse liquidity conditions.
Argentina was the exception, mainly for two reasons.
First, in the short term, due to the strength of the macroeconomic framework developed over the past two and a half years. Fiscal balance, monetary control, exchange rate flexibility, and a stronger external position combined to allow Argentina to preserve stability when other emerging economies were losing it.
Second, in the long run, because the impact through the trade channel is positive for the country: the prices of Argentina’s main export commodities increased. The trade balance in the first quarter continued improving, and the current account of the balance of payments was positive.
In other words, this year the Argentine economy will be expanding without causing an external imbalance like those that fueled devaluation expectations in the past.
This is a true milestone. But this is not only the reflection of the temporary change in export prices. It also reflects the structural change in export volumes, whether in booming sectors such as energy and mining, competitive areas such as the agro-industrial sector, innovative sectors such as technology services, or traditional industrial segments. Argentina is breaking export records across all categories.
The ignition of the export engine is no coincidence; it is the result of a commitment to greater legal predictability, lower tax burden, greater flexibility in resource allocation, elimination of financial restrictions, and the push to open new markets. In other words, we are witnessing the result of an economic management fully oriented toward making economic growth externally sustainable.
External sustainability is new due to its structural nature. Unlike the short-term view of sustainability, which is often limited to a debate around the real exchange rate (RER), lasting sustainability is based on various structural pillars:
– First, the fiscal anchor, which has been the indisputably most important determinant in the evolution of current account deficits.
– Second, the qualities of external financing, today led by foreign direct investment (FDI).
– Third, the promotion of domestic savings and resident capital repatriation. This pillar relies on currency competition, whose distinct feature is that it does not rely on FX hedging and does not foster a multiplier of the so-called Argendollars.
These structural changes are what turn into reality what we anticipated in December 2023: “The scarce currency in Argentina will no longer be the dollar, it will be the peso.” In this regard, today the BCRA’s purchase of reserves seems to be getting a lot of attention, with nearly 10 billion so far this year, among other economic variables.
But it would be a mistake to focus on stocks. The growing relative scarcity of the peso compared to the dollar is supported by the virtuous dynamics of flows. The simplest way to gauge the importance of this trend and understand the novelty brought by the current program is to resort to a historical comparison.
Let us recall the last stabilization attempt, at the end of 2017, when the economy was growing at barely around 2.5% and the current account deficit was climbing above 4.0%. Today the economy is growing at a rate of 4.5% and the current account shows a surplus. This is the simplest way to explain the contrast between the irreparable damage to confidence and stability caused by the adverse shock of 2018 versus the unnoticeable impact caused by the adverse shock of 2026.
2. Changes in relative prices do not spread inflation
In terms of prices, the CPI was recently affected by expected and temporary seasonal factors—meat, education, clothing. Those factors are already fading. Meanwhile, the gradual rise in prices over the past year was due to strong changes in relative prices, which is typical of a stabilization program that also introduces structural reforms.
In other words, the change in the aggregate price level is being affected by price adjustments in specific markets, i.e., (a) the normalization of public services rates, (b) the trade integration of tradable products such as meat, and more recently, (c) the domestic impact of the international oil price shock.
In this context, the expected outcome is observed: the underlying inflation has remained stable and has not shown significant second-round effects. This rests on a key reason: the fiscal and monetary anchor does not allow the transmission of such cost shocks to spread into other markets.
Therefore, the BCRA’s Market Expectations Survey unsurprisingly reflects that the private sector considers these impacts temporary, anticipating a sustained reduction in inflation in the near term. Inflation expectations remain anchored. In the coming quarters, inflation will continue to decline, despite the ongoing adjustment of relative prices.
3. Exports, along with consumption, are currently the main drivers of economic activity, which is about to receive the boost of investment
In terms of activity, not only exports are providing a boost. Private consumption—which has surpassed historical levels—is another driver. This may be striking given that there is a consumption peak even when the economy is still assimilating the impact of electoral uncertainty on bank loan delinquency, particularly personal loans.
The recovery of activity will consolidate, progressively encompassing more sectors. This regularly happens in all cycles; it can be corroborated by estimating the Sharpe ratio throughout each economic expansion. Although there are sectors that will be natural leaders of the current cycle, they need supplies, infrastructure, urban services, and logistics. In this way, their linkage with other sectors will contribute to job creation opportunities.
Although private investment declined in recent quarters due to electoral uncertainty, today an expansion is observed in domestic and external corporate financing sources. This expansion anticipates that the third engine of the ongoing economic expansion—investment—will start.
Structural reforms are key to starting this engine. The new composition of Congress has led to the recent enactment of legal frameworks with incentives to promote investment and formal employment. During the first quarter of 2026, two international agreements were signed, connecting the Argentine economy with markets representing 43% of global GDP.
4. Marketing channels, equilibrium margins, and financial intermediation are changing
Major impacts of innovation and deregulation are observed. The marketing channels and the size of margins associated with sales are changing. Against this backdrop, and as is the case with every successful stabilization plan, the private sector will need to adapt. In other words, equilibrium margins are being redefined.
– First, returns are adjusting because they are a function of declining risk. It is not feasible for margins that existed when country risk hovered above 2000 points to persist now that the indicator has fallen below 500 points.
– Second, the factors contributing to margins are being rebalanced due to the transition from a high- to low-inflation regime; where operational productivity will grow in relation to financial contribution.
– Finally, the ability to increase sales above the pace of price adjustments gains importance in terms of turnover.
For these reasons, in the current investment cycle, capitalization decisions aimed at achieving greater production scale are of special importance.
III. Cleaning up the BCRA’s balance sheet
Let me examine more closely something I consider a key point in this presentation and that goes beyond the current situation. I am referring to the BCRA’s income in fiscal year 2025, as shown in the recently published audited financial statements.
1. Income: The largest in more than twenty years
In constant currency, the income in fiscal year 2025 was the largest in the past 20 years, with the sole exception of 2019, which benefited from an extraordinary change in accounting criteria. Excluding that factor, the 2025 income is the best in more than two decades.
The BCRA’s net gain grew to ARS34.3 trillion, 34% higher than in 2024. Reserves were established for ARS11.4 trillion—13% more than the previous year—and the BCRA’s equity increased to ARS51.3 trillion, 66% higher than at the end of 2024.
In order to assess the relevance of these figures, it is important to mention that, for the second consecutive year, the result net of gains on listed price differences was also significantly positive.
2. Genuine sources of improvement
Where does such improvement come from? The composition of income in fiscal year 2025 reflects three genuine factors: lower interest income on a higher-quality asset, with a greater share of liquid reserves; lower financing costs due to the sustained reduction of remunerated liabilities—including the elimination of LEFIs in July 2025; and net income from asset revaluation. In other words: the BCRA’s balance sheet improved because the quality of its assets improved and the cost of its liabilities decreased.
3. Dividends: A virtuous circle
The dividends from fiscal year 2025 made available to the National Treasury amounted to ARS24.4 trillion. They were allocated in a novel manner: ARS18.4 trillion were used to repurchase Non-Transferable Treasury Bills held by the BCRA—equivalent to an original face value of USD21.7 billion—and ARS6 trillion were allocated to Treasury deposits with the BCRA.
This allocation creates a virtuous circle: balance sheet cleanup generates dividends that, when used to repurchase Non-Transferable Bills, instead of being monetized, further improves the quality of the BCRA’s assets. It is the opposite of the dynamic we inherited at the end of 2023, when the BCRA used to finance the Treasury at the expense of deteriorating its own balance sheet, intensifying exchange controls, and fueling inflationary expectations.
The strengthening of the BCRA’s balance sheet does not represent a merely accounting matter. Rather, it gives greater support to the peso thus helping to clear inflationary risks. A central bank with a stronger balance sheet regains monetary and foreign exchange policy instruments, while also being more effective in keeping expectations anchored in times of uncertainty.
IV. The BCRA’s strategy: Monetary, foreign exchange and financial policy
What is the agenda going forward? Let me highlight three important dimensions of the BCRA’s strategy.
1. Monetary policy: Liquidity management and credit cycle
In terms of monetary policy, the BCRA’s liquidity management seeks consistency. To this end, it recognizes that the evolution of monetary equilibrium and foreign exchange equilibrium may move at different speeds in the short term. The BCRA’s purchase of dollars expanded liquidity, but through its tools—open market operations, repos, simultaneous operations, and reserve requirement normalization—the BCRA preserves monetary equilibrium ensuring the continuity of the disinflation process.
In recent months, the sustained sale of dollars by companies has driven increased demand for Treasury liquid assets. The ultimate purpose of that sale is to fuel an investment cycle; therefore, it is anticipating a genuine increase in money demand, though with a longer lag than expected.
The credit cycle will also contribute to consolidating the increase in money demand. Recognizing the bimonetary nature of the financial system, the credit cycle is already in full expansion in the dollar segment, as the capital market is playing an increasingly important role in intermediation every month.
In the peso segment, the new cycle of expansion in private sector credit is close, given that delinquency appears to have peaked. The new cycle will be more selective, healthy, and sustainable. It will be based on the lessons learned by debtors and creditors who are adapting their behavior to a low-inflation regime where debts do not get diluted and where credit history matters when defining the borrower and the cost of credit.
2. Foreign exchange policy: Flexibility, reserve purchases, and increased “firepower”
In terms of foreign exchange policy, the floating regime has proven effective in absorbing shocks, both domestic and external. Today the exchange rate is stable, while international reserves are purchased in a favorable context of declining domestic interest rates.
The BCRA resets its firepower to face adverse situations beyond reserve accumulation. In this sense, multiple foreign exchange management tools are being reinforced:
– Last week, due to the expiration of May futures contracts, the BCRA practically finished closing its open position, which had peaked at around USD8 billion prior to the elections. The success in managing the BCRA’s futures book last year gives renewed credibility to that indispensable tool for managing foreign exchange equilibrium.
-Activated bilateral currency swaps will again be fully available by mid-year, whereas in December 2023 there was an outstanding amount close to USD8 billion.
– In anticipation of their expiration, the BCRA is advancing in the refinancing of repos with international banks for USD6 billion.
In turn, the reserve purchase program is also progressing despite the coexistence of excess supply in the foreign exchange market with an expansion of sources of demand. The BCRA is purchasing reserves in a context characterized by:
– Greater payment freedom for companies, both for imports and debt as well as dividends. In fact, so far this year the foreign exchange market has absorbed dividend demand for USD1.8 billion. In addition, the horizon for the free management of those operations was more flexible.
– Progress in BOPREAL payments. In fact, considering the most recent payment, 50% of the private commercial debt problem existing in December 2023 has been resolved.
– At the same time, the freedom granted in April 2025 for households to save in dollars no longer generates financial disruptions. On the contrary, after the midterm election, 90% of the dollars purchased in the Free Foreign Exchange Market (MLC) for savings, about USD1 billion per month, are saved within the domestic financial system. Therefore, these purchases do not reduce international reserves; quite the opposite: they support intermediation in dollars through bank credit and the capital market.
As the year progresses, it is expected that reserve accumulation will continue aligning with the pace of reserve purchases carried out by the BCRA. This will reflect the Treasury’s great progress in refinancing its dollar-denominated liabilities. The Treasury has been rationally prioritizing the cheapest sources of financing: taking advantage of the repatriation of residents’ dollar savings to issue dollar-denominated securities and transactions backed by guarantees from international organizations.
I would also like to mention that the recently published Monetary Policy Report (IPOM) includes a special section presenting important lessons for Argentina from the reserve accumulation process of the Central Bank of Peru (BCRP). This experience is of interest to Argentina because Peru also operates as a bimonetary economy and because its precedent is considered a success.
During the first two decades of the program, the BCRP’s international reserve accumulation: (a) was not associated with the value of the real exchange rate, (b) showed non-linear progress over time, (c) its period of greatest acceleration reflected exogenous factors, and (d) the trajectory of net reserves converged with lags to the pace of gross reserve accumulation.
3. Financial policy: Support, stability and competition
Finally, in terms of the financial system, two significant aspects should be highlighted.
– First, the full normalization of the reserve requirements framework, with the cash backing of deposits rising from a low of 4% at the end of 2023 to a historical level of 11% today. The requirement was rebalanced among categories and the regulatory framework was simplified. The banking system today operates with prudential backing of deposits and with high levels of capitalization.
– Second, the continuous improvement of the regime to control the amount of money is yielding encouraging results. The excessive volatility of interest rates that characterized the transition in 2025 was eliminated by the end of February 2026 without sacrificing the endogeneity of the interest rate. This reflected a combination of actions by the BCRA and the National Securities Commission (CNV): including (a) normalization of the policy for daily compliance with reserve requirements, (b) regulatory incentives favoring bank reintermediation, (c) operational improvements that make liquidity circulation among private agents more predictable, and (d) application of a regime that favors deleveraging and capitalization of non-bank intermediaries, among others.
On the BCRA’s agenda, it is a priority to advance the transformation already underway: greater competition, better intermediation services, and lower financial costs for companies and households within a framework of price stability and market incentives.
Conclusion: Stage 4 of the program creates opportunities
In conclusion, today’s message is that the progress of the economic program throughout its four stages creates great opportunities. The program, designed on sound macroeconomic principles and executed with political conviction, has produced outcomes that seemed “ambitious” two years ago or that, paraphrasing IMF Director Kristalina Georgieva, seemed “impossible.”
Specifically, today:
– The BCRA’s balance sheet reflects the best result in two decades, and getting back its tools limits future instability.
– Global shocks do not destabilize domestic expectations nor do they call for additional adjustments in macroeconomic policy.
– Inflation is falling thanks to the monetary anchor after strong relative price adjustments, while underlying inflation is behaving well.
– The economy is growing without external imbalances thanks to the fiscal anchor and despite a global, challenging context for most economies.
– Reserves are accumulating rapidly thanks to foreign exchange policy, and the BCRA is expanding and strengthening its other foreign exchange management tools, while the Treasury is broadening its sources of foreign currency financing.
– The financial system operates with support that is genuine and new incentives to fulfill its role of lender for the private sector; the capital market is moving toward greater capitalization and lower leverage.
– Depositors save in the country, taking advantage of a robust and efficient currency competition regime.
– Companies pursue investment opportunities with access to long-term financing, increasing price freedom, and absence of restrictions.
The BCRA will continue contributing to this virtuous process, exercising its mandate with prudence, patience, conviction, and with the same ambition it displayed at the beginning of its administration, in order to ensure stability and restore the economic potential that had been lost over decades in which unsustainable populist policies prevailed.
Thank you.
Download speech by the Deputy Governor of the BCRA at the 43rd IAEF Congress (PDF)
