Argentina reported Friday that consumer prices rose just 0.7% in March, bringing the annualized inflation rate down to 9.4%, the first single-digit annual reading since November 2018 and a stunning improvement from the 211% rate that prevailed when President Javier Milei took office in December 2023. The peso strengthened to 720 per dollar on the news, its highest level since 2022.
The data validates Milei's controversial shock-therapy program, which combined a 50% peso devaluation, the elimination of currency controls, the firing of more than 50,000 public sector workers, and aggressive cuts to energy and transport subsidies. Argentine sovereign bonds rallied to par for the first time in nearly a decade, with the Global 2030 trading at 100.4 cents on the dollar.
IMF Disbursement and Reserve Build
The IMF announced separately on Friday that it would release the next $4.7 billion tranche of the $40 billion extended fund facility agreed to in 2024, citing strong policy implementation and renewed access to international capital markets. Central bank reserves now stand at $42 billion, up from negative net positions when Milei took office, providing a meaningful buffer against external shocks.
Economy Minister Luis Caputo told Bloomberg in an interview that the government planned to lift remaining capital controls on direct foreign investment by July and resume regular peso-denominated debt issuance in domestic markets. He confirmed that Argentina was preparing to issue its first 30-year sovereign bond since 2017, with bookrunners JPMorgan and Citi expected to launch the deal in late May.
Political Implications and Midterm Elections
For Milei, the data arrives at a politically critical moment. October midterm elections will determine whether his Libertad Avanza party can break the Peronist hold on Congress and accelerate structural reforms including labor market liberalization and pension restructuring. Approval ratings now stand at 58%, up from 39% twelve months ago, with disinflation cited as the primary driver of the recovery in support.
For investors, Argentina is becoming a credible emerging-market reform story for the first time in a generation. The MSCI Argentina ETF has gained 142% over the past 12 months, dramatically outperforming the broader MSCI Emerging Markets Index. Fund managers including Cathie Wood's ARK Investment Management and Mark Mobius have publicly increased Argentina allocations, citing what Mobius called the most important policy success in Latin America since the 1990s.