Argentina's Economic Turnaround: Milei's Ambitious 2025 Plan

Argentina's bonds and stock index rose after President Javier Milei proposed an ambitious 2025 budget plan focusing on a zero fiscal deficit and significant economic growth. The plan forecasts a 5% economic expansion, a drop in inflation, and a primary fiscal surplus of 1.3% GDP.

Argentina's sovereign bonds and stock index saw early gains on Monday following the announcement of an ambitious 2025 budget plan by libertarian President Javier Milei. Investors were optimistic about the plan, which predicts robust growth and adheres to a 'zero' fiscal deficit mandate.

The S&P Merval stock index reached an intraday record high, surpassing its previous peak from earlier in the month. Bonds, which have been rallying since Milei assumed office in December, rose by approximately 1%. In his Sunday address to Congress, Milei reassured his commitment to a fiscal surplus and vowed to veto any legislation that jeopardizes his zero-deficit vision.

Known for his tough austerity measures, the right-wing former economist is dedicated to reversing years of fiscal mismanagement, combating rampant inflation, and stabilizing the economy. The 2025 budget forecasts a 5% economic growth, a reduction in inflation from over 250% to 18% by next year, and an exchange rate of 1,207 pesos per dollar by the end of 2025 from 960 per dollar currently. A primary fiscal surplus of 1.3% of GDP is also anticipated.

Analyst Marcelo Rojas commented on the new budget, describing it as 'very ambitious' but noting that the government's commitment to not overspending is already a notable achievement.

(With inputs from agencies.)