Argentina Votes for Change: Midterms Back Pro-Market Agenda

The recent legislative elections in Argentina have marked a turning point in the country's political and economic landscape.
The government achieved a resounding victory, surpassing expectations and highlighting the weakness of Kirchnerism. Although it does not hold an outright majority, it can reach one by negotiating with provincial governors, needing only 3 senators and 18 deputies to push forward key reforms such as tax and labor legislation. This opportunity is reminiscent of the one Mauricio Macri had in 2017, with the fundamental difference being that Kirchnerism is now significantly weaker in the Senate, opening a political window for the current administration.

On the external front, the exchange rate approached the upper limit of the currency band ahead of the elections, despite aggressive interventions.
In this context, support from the United States has been crucial in stabilizing Argentina’s financial situation. It is estimated that the U.S. Treasury sold USD 2 billion, signed a USD 20 billion swap agreement, and announced a guaranteed loan for another USD 20 billion, easing concerns about Argentina’s debt repayment capacity. As we noted in our analysis of Trump’s victory (here), the U.S. administration has played a key role in the region and has been a decisive ally for the Argentine government. This was also evident in the strong U.S. involvement in the political landscapes of Brazil and Colombia ahead of their upcoming elections.

The market reaction was immediate:
Argentine dollar-denominated bonds rose by 20%, bringing the country risk down to around 700bps — the lowest level since 2023, though still above the regional average. The S&P Merval index surged 30% in dollar terms, with banks leading the gains. Corporate bonds rose 3%, although they still trade with a 150bps spread over the Latam average. This positive dynamic reflects the expectation that the new political balance and international support could fuel a virtuous cycle for Argentina’s macroeconomy and financial assets.

Looking ahead, Argentina faces a real opportunity to redefine its path.
If the government manages to capitalize on this moment — with the president’s speech pointing in the right direction — the country could leave behind years of volatility and consolidate a sustainable growth trajectory. The potential is there: GDP is projected to grow by 4% in 2026, with a USD 35 billion investment pipeline under the RIGI (Incentive Regime for Large Investments), and the possibility of closing the external gap through investments and exports that allow for reserve accumulation.