The Year of The Chainsaw Politics

Argentina 2024 review

Argentina experienced staggering changes in 2024. Javier Milei surprised most analysts and investors with his determined actions. In 12 months, his administration reached a few milestones. The most impressive achievements are declining inflation and budget deficit, but they are the result of resolute actions.

Milei slashed a sizable part of the state apparatus. The most recent action was closing Administración Federal de Ingresos Públicos (AFIP), Argentina’s tax agency. RIGI (Incentive Regime for Large Investments) was implemented. Mining and energy are the primary beneficiaries. Removing the rental law in Buenos Aires revitalizes the real estate market in the capital.

In the third quarter of 2024, more good news came. A tax amnesty was granted for funds outside the Argentinean banking system. The goal is to stimulate Argentines to bring US dollars back home without fear of taxation and penalties. Thanks to Vaca Muerta developments, Argentina surpassed Colombia in oil production.

Drastic political and economic changes reignited investors' interest in Argentina. Argentinean bonds became a favorite high-yield sovereign bond.

They outperformed even distressed debt plays like Ukrainian and Lebanon bonds. Equity investors followed debt traders. MERVAL is the best-performing index for 2024, scoring 76% gains for the last 12 months.

Is this the golden age of Argentina and Javier Milei, its prophet?

The answer is not straightforward. Argentina has a habit of constantly shocking investors. The internal political risk is always present. The higher the MERVAL, the more painful a potential bear market would be. The last line reminds us to stay constantly vigilant.

That said, Argentina’s future looks brighter, and optimistic scenarios are getting more credible compared to 2023 and even 2024. Milei and his team have herculean work; moreover, the deeper they go, the more difficulties they will face.

A few pivotal events mark 2025. The first one is lifting the currency controls. If implemented successfully, it will improve Argentina's odds of striking a deal with the IMF. Mid-term elections will be held in October 2025. The outcome of these elections will show the path for the next two years of Milei’s term.

This is Argentina's report for Pro subscribers. Today, I review 2024 milestones and 2025 catalyst events and discuss Argentinean equities.