Acknowledgement
Good day. I would like 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 Directors of the BCRA before this audience.
This is the third consecutive edition in which I participate. As on other occasions, I once again share the BCRA’s diagnosis with the expectation that it will be useful to navigate and take advantage of the profound economic transformation of Argentina led by President Javier Milei and which has been widely supported by society in last year’s legislative elections.
I. Introduction: Launch, Transition and Consolidation
In my participation in the 41st IAEF Congress in 2024, I tried to clarify the objectives of Stage 1 and 2 of the stabilization program and project the way out of a problem of so many economic dimensions. La pregunta central era si la Argentina podía estabilizarse sin caer en los atajos de programas pasados, que terminaban en licuaciones inflacionarias, congelamiento de depósitos, restructuraciones de deuda y maxidevaluaciones recurrentes. La respuesta que ofrecimos desde el BCRA fue afirmativa.
Aspiring to consolidate stability and rebuild credibility required aligning macroeconomic pillars in a consistent, but not necessarily obvious, sequence. The strategy chosen was unconventional. But, precisely for that reason, it was proving effective: abrupt fiscal adjustment to end fiscal dominance, lowering interest rates to resolve the monetary overhang, transfer of liabilities to the treasury to curb monetary issuance, financial engineering to resolve private commercial debt and avoid a collapse in activity, and the implementation of an exchange rate slide to initially offer an anchor of predictability in a highly dollarized economy.
During the 42nd Congress in 2025, it was appropriate for me to share the diagnosis that stabilization was being successful but that we were in a year of transition. Having executed the “controlled demolition” of the previous economic regime, the main task of Stage 3 was to lay the new foundations for “building opportunities”.
Stage 3 had been inaugurated with the unification and flexibility of the exchange rate and would be completed later with the elimination of the monetary policy rate. These measures defined the regime of control of monetary aggregates as the only nominal anchor. The regime was different from the inflation-targeting paradigm that prevails today in economies that are already stabilized and with efficient 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 that Argentina is going through. Of course, 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 an acid test, today we can recognize the true consistency and strength of the program. It also allows us to assess the political conviction to support the program, unlike in the election years of the past when short-term convenience always led to fiscal and monetary easing.
On this occasion, the message I would like to share in relation to the 4th stage 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 does so from a very solid external position. For the first time, the Argentine economy preserves its domestic financial stability without requiring adjustments in economic policy, thus differentiating itself from most emerging economies.
The stability observed is no coincidence. It is the result of macroeconomic consistency and a framework of domestic price flexibility and trade integration that are beginning to guide the allocation of resources in the only way that is sustainable in the long term.
On this occasion I would like to organize my reflections around three axes:
– First, the progress of this 4th stage of the program, with particular emphasis on external balance;
– Second, the great progress made in the consolidation of the BCRA’s balance sheet, highlighting the contribution it makes to anchoring inflation expectations; y,
– Third, the BCRA’s strategy going forward in monetary, exchange and financial matters.
II. Phase 4 of the programme: Macroeconomic progress
Starting with the macroeconomic progress of Stage 4, I think it is appropriate to highlight 4 aspects of the current situation.
1- External balance and its unprecedented contribution to financial stability
2- Changes in relative prices that affected the CPI but do not generate inflationary 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, break-even margins and financial intermediation
1. External balance brings financial stability
The international scenario for the first quarter of 2026 was not benign. El conflicto en Medio Oriente reavivó presiones alcistas sobre la inflación global, elevó las tasas de interés internacionales e incrementó la volatilidad del dólar estadounidense. Emerging economies, as a whole, faced more adverse liquidity conditions.
Argentina was the exception, mainly for two reasons.
First, and in the short term, because of the strength of the macroeconomic framework built over these two and a half years. Fiscal balance, monetary control, exchange rate flexibility and the strengthening of the external position combined for Argentina to preserve stability when other emerging economies were losing it.
Second, and in the long run, because the impact through the trade channel is positive for the country: the prices of the main raw materials exported by Argentina increased. The trade balance for the first quarter continued to improve and the current account of the balance of payments was positive.
In other words, this year the Argentine economy will be expanding without producing an external imbalance such as those that have fueled expectations of devaluation on past occasions.
This is a real milestone. But the novelty is not only a reflection of the short-term variation in export prices. It also reflects the structural change in export volumes, whether in thriving sectors such as energy and mining, in competitive sectors such as agribusiness, in innovative sectors such as technological services, or in traditional segments of industry. Argentina is breaking export records in all areas.
The ignition of the export engine is not a coincidence, it is the consequence of a commitment to greater legal predictability, a lower tax burden, greater flexibility in the allocation of resources, the elimination of financial restrictions and the promotion of the opening of new markets. In other words, we are observing the result of an economic management that is integrally oriented towards giving external sustainability to economic growth.
External sustainability is a novelty due to its structural nature. Unlike the short-term view of sustainability that is usually limited to a debate around the real exchange rate (RER), lasting sustainability is based on several structural pillars:
– First, in the fiscal anchor, which has been the indisputably most important determinant in the evolution of current account deficits.
– Second, in the qualities of external financing, currently led by foreign direct investment (FDI).
– Third, in the promotion of domestic savings and the repatriation of residents’ capital. This pillar is supported by the competition of currencies that is distinguished by not depending on exchange rate insurance and does not promote a multiplier of argendollars.
These structural changes are what make what we anticipated in December 2023 a reality: “The scarce currency in Argentina will cease to be the dollar and will become the peso.” Around this diagnosis, today it seems to be paying special attention to the purchase of BCRA reserves, already almost 10,000 million 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 with respect to the dollar is sustained by the virtuous flow dynamics. The easiest way to measure the importance of this trend and understand the novelty that the current program brings is through a historical comparison.
Let us remember the last attempt at stabilization, at the end of 2017, when the economy grew at just around 2.5% and the current account deficit climbed above 4.0%. Today the economy has been growing at a rate of 4.5% and the current account is in 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 vs. the imperceptible impact of the adverse shock of 2026.
2. Changes in relative prices do not propagate inflation
In terms of prices, the CPI was recently affected by expected and transitory seasonal factors – meat, education, clothing. Those factors are already being left behind. Meanwhile, the gradual rise in prices over the last year has responded to strong changes in relative prices, typical of a stabilization program that also incorporates structural reforms.
In other words, the change in the aggregate price level is being affected by adjustments in prices in specific markets: I am referring to (a) the normalization of utility tariffs, (b) the trade integration of tradable products such as meat, and, more recently, (b) the domestic impact of the international oil price shock.
Given this picture, what is expected can be seen: core inflation remained stable and does not show relevant second-round impacts. Behind this there is a key reason: the fiscal and monetary anchor do not allow the transfer of the aforementioned cost shocks to other markets.
Therefore, it is not surprising that the BCRA’s Market Expectations Survey reflects that the private sector considers these temporary impacts, anticipating a sustained reduction in inflation in the immediate term. Inflationary expectations remain anchored. In the coming quarters, inflation will continue to fall, despite the continuous readjustment of relative prices.
3. Activity is being led by exports, accompanied by consumption, and is about to receive a boost from investment
In terms of activity, it is not only the dynamics of exports that offer a boost. It also accompanies private consumption, which exceeded historical levels. This may be surprising given that the peak in consumption is verified despite the fact that the economy is finishing digesting the impact of electoral uncertainty on the default in the loan portfolio of banks, particularly that of personal loans.
The recovery of activity will be consolidated, progressively covering more sectors. Esto sucede regularmente en todos los ciclos; es algo que se puede corroborar estimando el “ratio de Sharpe” a lo largo de cada expansión económica. Although there are sectors that will be natural leaders of the current cycle, to operate they require inputs, infrastructure, urban services, and logistics. In this way, its linkage with other sectors will contribute to the creation of employment opportunities.
Although private investment has fallen in recent quarters due to electoral uncertainty, today there is an expansion of domestic and foreign sources of corporate financing. This expansion anticipates that the third engine of the ongoing economic expansion will be ignited, investment.
Structural reforms are key in the ignition of this engine. The new composition of Congress has allowed the recent approval of legal frameworks with incentives to promote investment and formal employment. During the first quarter of 2026, two international agreements were signed that link the Argentine economy with markets that represent 43% of global GDP.
4. Changes are taking place in marketing channels, in break-even margins and in financial intermediation
Large impacts of innovation and deregulation are being observed. The routes to market and the size of the margins associated with sales are changing. Faced with these phenomena, and as in any successful stabilization plan, the private sector will have to adapt. In other words, the margins of equilibrium are being redefined.
– First, returns are adjusting because they are a function of decreasing risk. It is not feasible for the margins that coexisted when the country risk oscillated above 2000 points when the indicator has fallen below 500 points to persist.
– Second, the contributory factors to the margins are being rebalanced by the transition from a regime from high to low inflation; where operational productivity will grow in relation to the financial contribution.
– Finally, the ability to increase sales above the speed of price remarking is important in turnover.
For these reasons, capitalization decisions aimed at achieving a larger scale of production are particularly important in the current investment cycle.
III. The clean-up of the BCRA’s balance sheet
Allow me to dwell on a point that I consider central in this presentation and that goes beyond the conjuncture. I am referring to the results of the BCRA’s 2025 financial year, recently published in the audited financial statements.
1. The positive result: the highest in more than twenty years
In constant currency, the result for the 2025 financial year was the highest in the last 20 years, with the only exception of 2019, whose result benefited from an extraordinary change in accounting criteria. If we exclude that factor, the result of 2025 is directly the best in more than two decades.
The BCRA’s net profit grew to $34.3 billion, 34% more than in 2024. Reserves of $11.4 trillion were built up – 13% more than the previous year – and the BCRA’s net worth increased to $51.3 trillion, 66% more than at the end of 2024.
To get a sense of the quality of these results, it is important to mention that, for the second consecutive year, the net result of earnings due to differences in share price was also significantly positive.
2. Sources of improvement: genuine
Where does this improvement come from? The composition of the 2025 result reflects three genuine factors: lower interest income on a better quality asset, with a higher share of liquid reserves; a lower cost of financing due to the sustained reduction of interest-bearing liabilities – including the elimination of LEFIs in July 2025; and a net income from revaluation of assets. In other words: the BCRA’s balance sheet improved because the quality of its assets improved and the cost of its liabilities was reduced.
3. Dividends: a virtuous circle
The dividends for the 2025 fiscal year made available to the National Treasury amounted to $24.4 billion. Its destination is novel: $18.4 trillion was applied to repurchase Non-Transferable Treasury Bills in the BCRA’s portfolio – equivalent to an original nominal value of USD 21,700 million – and $6 trillion was constituted as Treasury deposits in the BCRA.
This allocation of results creates a virtuous circle: the clean-up of the balance sheet generates dividends that, when applied to the repurchase of Non-Transferable Bills, instead of being monetized, further improves the quality of the BCRA’s assets. It is the opposite of the dynamics we inherited at the end of 2023, when the BCRA financed the Treasury at the cost of deteriorating its own balance sheet, intensifying exchange controls, and fueling inflationary expectations.
The strengthening of the BCRA’s balance sheet is not merely an accounting issue. This strengthening gives greater support to the peso and, in this way, contributes to clearing inflationary risks. A central bank that strengthens its balance sheet recovers monetary and exchange policy instruments and is more effective in keeping expectations anchored in times of uncertainty.
IV. The BCRA’s strategy: monetary, exchange rate 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 the Credit Cycle
In terms of monetary policy, the BCRA’s liquidity management pursues consistency. To this end, it recognizes that the evolution of the monetary equilibrium and the exchange equilibrium may run 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 the normalization of reserve requirements – the BCRA preserves the monetary balance that ensures the continuity of the disinflation process.
In recent months, the sustained sale of dollars by companies has fueled an increase in demand for liquid Treasury assets. The ultimate purpose of that sale is to fuel an investment cycle, therefore, it is anticipating a genuine increase in the demand for money, although with a greater lag than expected.
The credit cycle will also contribute to consolidating the increase in demand for money. Recognizing the bimonetary nature of the financial system, in the dollar segment the credit cycle is already in full expansion and, in parallel, the role of the capital market in intermediation grows every month.
In the peso segment, the new cycle of expansion in credit to the private sector is close as non-performing loans appear to have peaked. The new cycle will be more selective, healthy and sustainable. It will be based on the learning of debtors and creditors who adapt their behavior to a low-inflation regime where debts do not liquefy and where credit history matters when defining the subject and the cost of credit.
2. Exchange rate policy: flexibility, purchase of reserves, and increased “firepower”
In terms of exchange rates, the floating regime has demonstrated its virtue as a buffer against shocks, both domestic and external. Today the exchange rate is stable, while the purchase of international reserves takes place in a favorable context of falling domestic interest rates .
The BCRA resets its firepower to face adverse situations beyond the accumulation of reserves. In this regard, multiple exchange rate management tools are being strengthened:
– Last week, due to the expiration of May futures contracts, the BCRA practically finished closing its open position that reached a peak of around USD 8 billion prior to the elections. The success in this management of the BCRA’s futures book during the past year gives renewed credibility to this indispensable tool in the management of the exchange rate balance.
– Activated bilateral currency swaps will be fully available again in the middle of this year, when in December 2023 they were pending payment in an amount close to USD 8 billion.
– In advance of their maturities, the BCRA is advancing in the process of refinancing repos with international banks for USD 6 billion.
As for the reserve purchase program, it is also observed that it is advancing despite the fact that the excess supply of the foreign exchange market coexists with an expansion of sources of demand. The BCRA’s purchases take place in a context of:
– Expansion of the freedom of payments by companies, both imports and debt as well as dividends. In fact, so far this year the foreign exchange market has absorbed, so far this year, demand for dividends for USD 1.8 billion dollars. In addition, the horizon for the free management of these operations became more flexible.
– Progress on Bopreal payments. In fact, as of the most recent payment, 50% of the private commercial debt problem existing in December 2023 has been resolved.
– In parallel, the freedom granted in April 2025 to families to save in dollars no longer generates financial disruptions. On the contrary, it is observed that after the mid-term election, 90% of the dollars purchased in the MLC for hoarding, close to 1 billion per month, are saved within the local financial system. These purchases therefore do not reduce international reserves and, on the contrary, feed intermediation in dollars through bank credit and the capital market.
As the year progresses, it is expected that the accumulation of reserves will continue to align with the pace of the purchase of reserves carried out by the BCRA. This will reflect the Treasury’s great progress in the program of refinancing its dollar obligations. The Treasury has been rationally prioritizing the cheapest sources of financing: taking advantage of the repatriation of residents’ savings in dollars to place securities in dollars and operations with guarantees from international organizations.
I would also like to mention that the recently published Monetary Policy Report (IPOM) has a special analysis section that presents important lessons for Argentina from the process of accumulation of reserves of the Central Bank of Peru. 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 process of accumulation of international reserves: (a) was not associated with the value of the real exchange rate, (b) presented a non-linear progress over time, (c) its period of greatest acceleration reflected exogenous factors , and (d) the trajectory of net reserves converged with lags in the rate of accumulation of gross reserves.
3. Financial policy: Support, stability and competition
Finally, in terms of the financial system, two transcendental issues can be highlighted.
– First, the full normalization of the bank reserve framework where the cash backing of deposits rose from its minimum of 4% at the end of 2023 to its historical level of 11% today. The requirement between categories was rebalanced and the regulatory framework was simplified. The banking system today operates with a prudential backing of deposits and with high levels of capitalization.
– Secondly, the continuous improvement of the regime of control of the quantity of money is yielding encouraging results. The excessive interest rate volatility that characterized the transition in 2025 was eliminated at the end of February 2026 without sacrificing the endogeneity of the interest rate. This reflected a combination of actions by the BCRA and the CNV: including (a) the normalization of the policy of daily integration of reserve requirements, (b) regulatory incentives that favor bank reintermediation, (c) operational improvements that make the circulation of liquidity between private individuals more predictable, and (d) the application of a regime that favors the deleveraging and capitalization of non-bank intermediaries, among others.
The BCRA’s agenda continues to prioritize the deepening of the transformation initiated: greater competition, better intermediation services, and lower financial costs for companies and families in a framework of price stability and market incentives.
Conclusion: Stage 4 of the program opens up opportunities
In conclusion, today’s message is that the progress of the economic program throughout its 4 stages opens up great opportunities. The program, designed on sound macroeconomic principles and executed with political conviction, has produced results that seemed “ambitious” two years ago or, to paraphrase IMF chief Kristalina Georgieva, seemed “impossible.”
Specifically, today:
– The BCRA’s balance sheet reflects the best result in two decades and the recovery of its tools limits future instability.
– Global shocks do not destabilize domestic expectations or require additional adjustments in macroeconomic policy
– Inflation is coming down thanks to the monetary anchor after strong relative price adjustments, while core inflation is performing well.
– The economy is growing without external imbalances thanks to the fiscal anchor and despite a challenging global context for most economies.
– Reserves are accumulating rapidly thanks to the exchange rate policy and the BCRA expands and reinforces its other foreign exchange management tools, while the Treasury is making progress in expanding its sources of financing in foreign currency.
– The financial system operates with genuine support and new incentives to fulfill its role of lending to the private sector; The capital market is heading towards greater capitalization and lower leverage.
– Depositors save in the country by taking advantage of a robust and efficient currency competition regime.
– Companies pursue investment opportunities with the availability of long-term financing, increasing price freedom and the absence of restrictions.
The BCRA will continue to contribute to this virtuous process, exercising its mandate with prudence, patience, conviction and with the same ambition set at the beginning of its administration, in order to ensure stability and reestablish the economic potential that had been lost over decades in which unsustainable populist policies prevailed.
Thank you.
