Choose your own Argentina

D

epending on which data you look at, you get a different Argentina. You can torture data until it confesses whatever you want, but in this case, it’s not only the figures but where you place your magnifying glass.

There is an Argentina that is booming. The country recorded its highest foreign trade surplus in April, US$ 2.7 billion, driven by record exports of US$ 8.9 billion. Energy exports grew almost 90 percent year on year, thanks to Donald Trump’s war games in the Middle East, which are motivating Vaca Muerta producers to drill like there is no tomorrow. In March, economic activity grew 5.5 percent year-on-year, overcoming the decline seen in the first two months of the year. President Javier Milei’s  administration is entering the golden quarter of farming exports in solid macroeconomic shape.

Public consumption, however, is not picking up. In April it fell 3.8 percent – the seventh consecutive monthly decline. It has not grown since the ruling La Libertad Avanza party won the midterms in October. Since Milei took office as President in December 2023, there are now 205,000 fewer people formally employed in Argentina.

The main political question for the next year is whether these two Argentinas will begin to converge or drift further apart. This week, the Milei administration sent Congress a bill to create a “Super RIGI” programme – an enhanced version of the incentive programme for major investment projects. This time it targets newer sectors of the economy, like lithium battery manufacturing, electric vehicles, solar panels and data centres, among others. The set of benefits is higher than under the original RIGI – lower income tax, zero export duties from day one and fully free imports. The government argues that the fiscal cost of the new programme would be zero, because it applies to sectors that would not invest in the country otherwise.

Fiscal calculations aside, the trajectory points to more rather than less economic fragmentation. Back in 2024, Milei and his team explained that RIGI was necessary to give investors a bubble of normalcy while the rest of the economy caught up – but now Super RIGI promises another, larger bubble. This ghetto approach to economics runs contrary to Milei’s promise of little-to-no government intervention. RIGI and Super RIGI are picking winners to make them move faster, under the assumption that their boom will eventually reach the rest of the Argentine economy.

It is a risky bet, but that does not mean it cannot work. Argentina’s impressive foreign trade numbers are already improving Milei’s capacity to keep the nation’s macro-financial variables stable, something citizens cherish after years of spiking inflation and foreign exchange rate volatility. Economy Minister Luis Caputo should know – not least from his own experience as Central Bank governor under then-president Mauricio Macri in 2018 – that having international reserves is the only antidote to whatever political risk may lie ahead, at least if his top goal is to avoid a run on the peso once the electoral season kicks off next year. Central Bank reserves recently reached their highest level since 2019 – one year after Caputo had been ejected

In the meantime, it is unclear what the government’s agenda will be for ordinary tax-paying Argentines. If the IMF had its way, there would be more rather than fewer taxes – the reverse of the RIGI approach. The Fund’s most recent staff report approving the second revision of Argentina’s US$20-billion agreement signed in April 2025 says that more workers should pay income tax (ganancias) and that self-employed and independent workers under the simplified ARCA tax bureau regime (monotributistas) should pay substantially more than they do now.

These reforms would be unpopular in the run-up to a re-election campaign, and would deepen the divide between the tax-free bubble for investors and a tax-burdened desert for ordinary Argentines. The public here has been very patient, more than the country’s history has indicated and more than the populace in neighbours like Chile or Bolivia. Milei can take the credit for that – but he should never take it for granted.