The phrase “Only when the water goes down will it be discovered who has been swimming naked” summarizes the difficulties in recognizing and understanding the risks to which all economic actors are exposed. This principle is confirmed again and again when stability reveals fragilities that were previously hidden beneath the surface of the situation.
The government successfully passed the midterm elections, but this success should not lead to complacency or prevent the identification of future scenarios or the use of lessons learned.
Among the main problems that the current national leadership has taken on were the fragile balance of the central bank and the existence of negative net foreign reserves. Thanks to successful management and the support of the International Monetary Fund, much of this panorama was able to be reassembled in a short period of time.
However, the program failed to accumulate international reserves in a sustainable and genuine manner. This weakness has become particularly significant given the lack of access to credit markets and the concentration of debt maturities from January 2026. The progress made is therefore offset by tasks that are still becoming more and more urgent.
The progress made is offset by ongoing tasks that are becoming increasingly urgent.
Despite this limit, macroeconomic stability appeared to prevail. After several legislative defeats the Achilles heel of the stabilization strategy was revealed, showing the true fragility of the plan. In this context, it was necessary to test the soundness of the diplomatic and economic relations with the United States that have been established since the beginning of the administration.
The The geopolitical situation was favorable and US support was achieved to a significant degree, enabling an electoral victory based on the model’s key achievements: the reduction of inflation and the beginning of economic normalization.
In the area of Risk managementcountercyclical thinking is essential. Its goal is not to promote pessimism, but to anticipate future problems by identifying plausible scenarios and preventing them in a timely manner.
In this sense, the enthusiasm over the election victory should not obscure the ongoing structural difficulties, in particular one of the most notable: the low ratio of international reserves to GDP.
A structural difficulty is the low ratio of international reserves to GDP, which is about 5%, while in Brazil and Chile it reaches about 15% and in Uruguay 20%.
Looking to the immediate future, two possible scenarios are outlined.
- Most optimistic This implies a sustained decline in sovereign risk and the reintegration of Argentina into international debt markets. This success would allow the renewal of financial maturities starting next year, reducing the need to permanently rely on external support and marking a milestone for the current government: Argentina’s return to international creditworthiness.
- The negative scenario It remains latent and harbors dangers that can be activated by both internal political or economic events and global factors.
A significant event in a relevant world economy can trigger the traditional flight towards quality (fly-to quality) and cause funds to flow out of higher risk markets. Alternatively, a cut in US aid would immediately send negative signals to investors and impact Argentina’s sovereign risk.
The variants are many, but the key is that reality is constantly changing and that national resilience is measured by the ability to anticipate, respond and ensure compliance with commitments made.
The most effective way to avoid the negative scenario is to implement a sustainable and efficient international reserve accumulation plan. Argentina needs to rebuild its stock of foreign assets; Only then will it be considered a reliable debtor and can access financing under appropriate long-term conditions.
The central problem of the current economic program – if we can speak of a single program – is its difficulty in accumulating international reserves in a robust manner. Just as savings represent a family’s protection against unforeseeable events, external assets represent the fundamental guarantee to honor commitments at the international level, regardless of external assistance.
The most effective way to avoid the negative scenario is to implement a sustainable and efficient international reserve accumulation plan.
The experience of the last few months shows that stability alone is not enough. The euphoria of temporary success will only have value if it is based on informed learning and policies are formulated that transform recovery into lasting resilience.
In the delicate transition between panic and euphoria, reserve consolidation and growth are key to ensuring the stability and predictability necessary for Argentina’s sustainable development.
The author is a professor of risk management at the IAE Business School. This note was published in the October IEM by IAE, Austral University Business School