Argentina recorded a primary fiscal surplus of 1.4% of gross domestic product in 2025, the government’s second consecutive annual surplus following 14 consecutive years of deficits, according to the Economy Ministry. The 2026 budget, passed by Congress in December, targets a primary surplus of 1.2% of GDP and projects inflation easing to approximately 10% for the year.
Monthly inflation fell to 2.1% in May, the National Institute of Statistics and Censuses reported, the lowest monthly rate in eight months. However, year-over-year inflation rose to 33.2%, reflecting a weak comparison base that economist Soljancic said underscored the uneven nature of Argentina’s disinflation process.
S&P Global upgraded Argentina’s sovereign credit rating to B- from CCC in June, the agency said, citing improvements in the country’s fiscal and external accounts.
The report, part of a six-part series on Latin American economies, identified the central challenge as convincing the public and investors that the reforms will survive political pressure. Soljancic noted that Argentina has experienced stabilization programs before that produced initial improvements only to collapse when governments abandoned fiscal restraint or resumed monetary financing of public spending.
“Credibility, therefore, depends on institutions rather than promises,” Soljancic wrote.
The analysis recommended that the Central Bank operate with genuine independence, with a mandate focused on price stability and explicit restrictions on financing government deficits. Fiscal rules should include transparent correction mechanisms when targets are missed, and independent supervision would further reassure investors that discipline does not depend on a single administration, according to the report.
Spending restraint must continue but become more strategic, Soljancic said, with reductions in programs that have little measurable impact and consolidation of overlapping agencies. He said essential public services and assistance for the most vulnerable should be protected during the transition, adding that reforms that ignore social pressures risk provoking resistance that undoes their achievements.
On privatization, the analysis cautioned that selling assets through transparent procedures under clear rules with credible public oversight is critical. “Transferring a state monopoly into private hands without adequate competition would merely replace one form of inefficiency with another,” Soljancic wrote.
Tax reform and simplified regulations are needed to encourage formal employment and attract long-term investment, the report said. The most distortive taxes should be eliminated or reduced, and investors need confidence that tax and regulatory rules will not be changed retroactively.
Argentina’s state energy company YPF filed a $25 billion investment application in May under the government’s Large Investment Incentive Regime, known as RIGI, aiming to lift export-bound oil output to 240,000 barrels a day by 2032, the Economy Ministry said. Total RIGI-linked projects, approved and pending, now approach $95 billion.
Soljancic noted Argentina’s advantages, including internationally competitive agriculture, the Vaca Muerta shale formation, a relatively educated population, and a large domestic market. But he said these advantages have been held back by instability, with inflation making long-term planning difficult and frequent regulatory changes adding uncertainty.
“Each consistent step can reduce uncertainty and lower the cost of capital, supporting new investment and formal employment,” Soljancic wrote. He said the decisive test will be whether the reforms become lasting institutions rather than a single administration’s project, and whether ordinary Argentines see the benefits in their daily lives before they are asked to defend them politically.