Wall Street is cheery With Argentina. It is true that there are questions and doubts about recalibrating technical issues such as the level at which the exchange bands should be adopted or the number of dollars needed to finance growth in 2026, a calculation that comes from making the difference between the currencies that will enter and those that will exit due to debt and the purchase of dollars for hoarding. But you only have to look at Swiss bank UBS’s summary from a few days ago to catch investors’ eyes: “We hope that economic variables in Argentina will continue to improve.”
UPS report, “Argentina 2026: The second phase of Miley’s transformation”It talks about the possibilities and opportunities for the government to move forward with structural reforms and accumulate more reserves (according to the consulting company 1816, within the framework of the IMF methodology, Net reserves are negative at approximately US$17 billion After paying the Bopreal bonus on Monday).
“Structural reforms, including taxes, labor and general economic liberalization -UPS says-, “It is likely to be successful even if approved in a diluted form.”. The bank discounts amendments to projects as long as the ruling party receives support in Congress. “Miley enters 2026 with greater political strength, expanding coalition options.”.
The euphoria continues. At this time in the United States comes “Very likely” In order for the government to obtain a loan or funds to meet the upcoming maturity of sovereign debt ($8.4 billion in dollar bonds in the whole of 2026). There is talk of “at most” $5,000 million at the moment and the securities could be put up as collateral.
“The good mood should continue in the markets” Economist Fernando Marol dares to say so.
Even the International Monetary Fund, which has been particularly critical of the exchange rate bands, would not take a dim view of the adjustment (which the government denies has occurred) after the credit operation being negotiated with the banks. In this way, Argentina will have more resources to counter the exchange rate service and the Organization can take the aforementioned corrective action due to the waiver due to the deviation in the reserve accumulation target that Argentina will bear.. The IMF Board will not approve the next disbursement until 2026.
Banks write to their clients that there are three sectors critical to targeting Argentine exports and providing reserves for the country: Agriculture, energy and mining. You have to invest there, they say to the funds.
But what about the rest of the economy?
A detailed analysis by consulting firm Miguel Kegel on Indec activity data for September (known last week and published as having risen by 0.5%) found that the increase in credits to the private sector and the trading volume of public securities at dealers and stock exchange companies explains the growth of the financial sector in that month. The weight is that from December 2024 to today, overall activity has grown by 1%. But if the contribution of the financial sector is excluded, the increase will be zero.
“This generates a double feeling: there is ‘sweet money’ to finance a car or machinery, but there is still a lack of ‘money on hand’ to fill the mess.”“, says Kiguel’s Econviews work. He usually recalls the economist Gerardo della Paolera when he says that Argentina is a country where “You buy chocolate in installments and real estate in cash.”
Perhaps the economic and social consequences of the current model adopted by Javier Miley, which requires large-scale financing to support highly competitive sectors, also form part of the second phase of the transformation that UBS refers to in its report, in addition to the reforms it mentions. Maybe it’s the undesirable effects of the modification, Waterloo Economy Carlos Menem when the unemployment rate at that time reached nearly 20%.
The government believes this happened because reforms were not undertaken to make the economy more resilient to avoid a recession similar to the one that occurred after 1999, after the value of the rial depreciated.
Through reforms, Miley seeks to make the economy less rigid than the soft economy of the 1990s. So much so that he would apply the liberal economists’ principle that if someone doesn’t get a job in Conurbano, they should move to Neuquén or Catamarca to earn income. Miley’s vision is based on the assumption that not only physical and financial capital flows freely, but also human capital. Political scientists like Sebastian Mazzuca or Andrés Malamud talk about it Potential deurbanization in Argentina under the Miley model.
However, what economists often imagine on paper is difficult to translate into reality.
This is evident in the recent book “The London Consensus,” by economists Andres Velasco and Tim Beasley of the London School of Economics, who specifically warn that people want to stay in places where they have roots and emotional ties. And what economists think on a piece of paper doesn’t always happen. Also in an article from the Nobel Prize in Economics Weekend, Darun Acemoglu, V Financial Times. Rafael Roffman, an economist and demographer for the Sepik party, points out that Argentina’s future production will be increasingly services-intensive. “It will require minor immigration moves. Few people will go to Patagonia to work in a data center that will also employ few people.”
It has been a long time since the distance between Wall Street’s euphoria and the doubts about the real economy was as great as the one we saw at the end of the year.