Thoughts from Buenos Aires by Tim Chamberlain

I am freshly back from two busy days in Buenos Aires, meeting with private equity GPs, government officials (including a senior figure from the Ministry of Deregulation and State Transformation), and the CFO of one of only 11 Argentine companies with ADRs trading in New York.

My main takeaway from the trip is that things really are different this time, but there is also significant “key-man” risk, with seemingly everything depending on Milei. The conversations with PE managers were, unsurprisingly, very positive. However, speaking with a senior economist who was set to lead the central bank—only to be passed over at the last minute—was revealing. This person had been tasked not only with leading the central bank but also with dismantling it during the administration’s mandate. He lost ground at the eleventh hour when pragmatism took hold, in what was likely a quite humiliating turn of events for him.

Even he confirmed the prevailing view that Milei does not care about approval ratings. He is not a politician in the traditional sense, nor is he concerned with winning a second term—he is singularly focused on eliminating the deficit. This was frequently contrasted with the Macri administration (2015-2019), which started off well but veered off course when Macri began prioritizing political considerations over his original mandate. In contrast, Milei sees his mandate as achieving zero deficit, which means aggressively cutting spending and reducing the size of government.

The question is: How far can this approach take Argentina?

So far, it appears to be working. The midterms are approaching in October, and Milei is boasting approval ratings of 50%-60% across the various polls. He is on track to increase his party’s representation in Congress, which would significantly enhance his ability to push through further reforms.

In the short term, the main risk seems to be an external shock—some kind of global event that disrupts emerging market currencies and harms Argentina. The country has already endured painful economic medicine in 2024, but people are beginning to see the benefits of that sacrifice (for instance, going to the supermarket and seeing stable prices month after month). If another crisis were to hit, this progress could be tested.

However, looking back to when Milei took office, very few predicted he would achieve as much as he has in his first year. There is clearly strong momentum to continue the reforms.

The three key triggers for further progress are:

1. A free trade agreement with the U.S. – This seems to hinge largely on a good relationship with President Trump, given that Argentina is a relatively minor trading partner for the U.S.
2. The lifting of currency controls – Milei has promised this will happen by January 1, 2026, at the latest, but there is speculation it could come sooner, possibly before the midterms.
3. A strong showing in the midterms – This would provide a mandate for deeper reforms.

Regarding the midterms, there is currently no serious opposition. Milei has significantly weakened the Peronist movement by managing to appeal across the political spectrum. In fact, some of his strongest support comes from the lower-income segments of society. It’s not that he eliminated social payments; rather, he made them more efficient by cutting out the widespread graft that had become endemic.

How to Play Argentina From Here?

Our group had mixed views on this, though we were fairly unanimous in our overall bullish stance. The key debate was public vs. private investments.

Most leaned toward public markets, as there is strong confidence in Argentina’s trajectory for the next couple of years. Beyond that, risks increase—things can change, and reforms can be reversed. If the bull case plays out, investors in public markets should benefit from overall growth and multiple expansion, with the added advantage of liquidity.

On the other hand, private investments—such as midstream oil & gas—offer the potential for outsized returns, but with longer duration. For now, major global P.E players remain absent from Argentina, and opportunities are everywhere you look. I think finding the right partner here could lead to spectacular outcomes.

Final Thought

As a CFO told us, for foreign investors, the only thing that really matters is government spending and the deficit, so just pay attention to that. As long as the government maintains fiscal discipline, Argentina has enough natural advantages to do well.

But if the spending tap is turned back on?

“We’re like addicts—it would be an ugly relapse.”