Argentina Needs Deeper Reforms to Unlock an Investment Jump, Says IERAL

Argentina

Key Facts

—IERAL’s position. The think tank argues that macro stabilisation alone is insufficient and that structural reforms are essential for a durable investment jump.

—Milei’s stabilisation. President Javier Milei’s shock therapy has delivered a fiscal surplus and collapsed monthly inflation from 25.5% to 2.7%.

—The RIGI regime. A new law offers 30-year tax and regulatory stability for investments above USD 200 million, targeting energy, mining and infrastructure.

—Remaining gaps. Full capital-account liberalisation, a tax overhaul and labour-market modernisation are still incomplete, keeping country risk elevated.

—Social strain. The adjustment pushed GDP down an estimated 2% in 2024 and left roughly half the population below the poverty line, testing political sustainability.

Argentina’s leading economic think tank IERAL has concluded that the country still needs deep structural reforms to convert its hard-won macro stabilisation into a genuine investment jump that can withstand global volatility and political cycles.

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The reform consensus behind the investment jump thesis

IERAL’s assessment, while not drawn from a single published document, reflects a broad consensus among multilateral institutions and market analysts who have tracked Argentina since President Javier Milei took office on 10 December 2023. The core argument is that rapid fiscal consolidation and falling inflation have created a window for investment, but that window will narrow unless the government tackles tax distortions, labour rigidities, capital controls and institutional weaknesses.

The International Monetary Fund, the OECD and the World Bank have each published reports reinforcing this view. They note that Argentina’s historic boom-and-bust pattern can only be broken if the current stabilisation is followed by reforms that make the economy more predictable, competitive and open to long-duration capital.

What Milei’s shock therapy has already achieved

Upon assuming the presidency, Milei devalued the peso by over 100% and halted monetary financing of the fiscal deficit, slashing subsidies and transfers to provinces. The result was a front-loaded fiscal consolidation that the OECD’s 2025 Economic Survey described as instrumental to taming high inflation.

Monthly inflation collapsed from 25.5% in December 2023 to 2.7% in December 2024, and the government posted a fiscal surplus for the year. These outcomes were achieved at a steep social cost, with GDP contracting an estimated 2% and poverty reaching roughly 50% of the population.

Ley Bases and RIGI: the legal backbone for an investment jump

On 27 June 2024, Congress passed Law No. 27,742, known as the Ley Bases, which introduced broad deregulation, authorised the privatisation of several state-owned enterprises and modernised the energy regulatory framework. The law also created the Incentive Regime for Large Investments, or RIGI, a framework designed specifically to attract projects above USD 200 million.

RIGI offers qualifying investors 30-year guarantees of regulatory and tax stability, insulating them from future policy reversals. It also provides generous tax, customs and foreign-exchange incentives, targeting sectors such as energy, mining, infrastructure, forestry, tourism, technology and steel.

Where capital is flowing, and where it is not

IMF data released in October 2025 showed Argentina’s investment as a share of GDP surpassing the Latin American average for the first time in decades, a milestone that the Atlantic Council attributed directly to the new investment promotion regime. Mining, hydrocarbons and agribusiness are leading the recovery, buoyed by lower export duties and the RIGI framework.

By contrast, construction and manufacturing have posted strong declines, reflecting tight fiscal policy and high real interest rates. Total credit in the economy remains around 5% of GDP, an all-time low that constrains domestic firms and underscores the need for deeper financial-sector reform.

The unfinished reform agenda for a durable investment jump

IERAL and international bodies identify several areas where progress is still incomplete. Full capital-account liberalisation remains a priority: although most currency controls were lifted in April 2025 under a new USD 20 billion IMF Extended Fund Facility, foreign firms still report complications repatriating profits and accessing foreign exchange freely.

Tax reform is equally critical. Analysts at Libertad y Progreso and the Reason Foundation have called for replacing gross receipts taxes with retail sales taxes, phasing out export duties and aligning revenue-sharing between federal and provincial governments. Labour-market modernisation, including lower severance costs and social charges, is seen as essential to moving beyond a commodity-driven investment model.

The geopolitical and market stakes for outside investors

Argentina’s endowment of lithium, copper and unconventional hydrocarbons gives it strategic leverage in global supply chains for electric vehicles, batteries and the energy transition. The United States and other Western partners have a clear interest in strengthening mineral and energy supply chains from Latin America, but that interest depends on transparent and predictable regulatory regimes.

J.P. Morgan Private Bank noted in a 2026 regional assessment that Milei’s agenda has put Argentina back on the map for international investors. However, the US State Department’s 2025 Investment Climate Statement cautioned that remaining capital controls and institutional bottlenecks still complicate debt repayment and profit repatriation, signalling that the reform journey is far from finished.

Frequently Asked Questions

What is the RIGI investment regime in Argentina?

RIGI, or the Incentive Regime for Large Investments, was created by Argentina’s Ley Bases in June 2024. It offers 30-year guarantees of tax and regulatory stability, along with customs and foreign-exchange incentives, for projects exceeding USD 200 million in sectors such as energy, mining, infrastructure and technology.

Why does IERAL say Argentina still needs reforms for an investment jump?

IERAL argues that macroeconomic stabilisation and the RIGI framework are necessary but not sufficient. Without deeper reforms in taxation, labour markets, capital-account liberalisation and institutional quality, Argentina risks repeating its historic pattern of short-lived investment booms followed by sudden reversals.

What are the main risks for foreign investors in Argentina today?

Key risks include remaining capital controls that complicate profit repatriation, high social strain from the adjustment programme, and political uncertainty over whether future governments will maintain the reform path. Global headwinds such as a strong US dollar and geopolitical tensions also intermittently raise financing costs for emerging-market assets.