Last Sunday, against all odds and going through numerous vicissitudes, La Libertad Avanza, the party led by Javier Milei, swept the mid-term elections. With this result, the ruling party managed to consolidate a political majority that enables it to deepen the liberal reforms aimed at setting Argentina on the road to a new cycle of growth and sustained prosperity.
The generational replacement emerges as the main driver of this change, while the old Peronism, without clear leaders or a renewed narrative, seems to be entering a stage of structural decline.

At the core of Milei's economic program is fiscal discipline, a principle that the President has defended from day one as an indispensable condition to break with the country's cyclical crises. In his view, the root of all Argentine collapses lies in the excesses of public spending and the political irresponsibility that promoted them.
On this basis, the new direction proposes to deregulate the economy, simplify the tax system and reduce taxes, giving air back to the private sector as the engine of development.

However, to transform theory into results, Milei will need to exhibit political flexibility. The structural reforms needed by the economy -particularly labor and tax reforms- can only move forward through agreements with sectors of the constructive opposition. Achieving this balance between conviction and pragmatism will be key for the reform process not to be shipwrecked in Congress or in the streets.

After the hard fiscal adjustment implemented to put public accounts in order, the challenge now is to sustain governance and popularity, showing signs of economic reactivation. The government is betting that stabilization will lay the foundations for a recovery sustained by private investment.
The plan includes easing the tax burden, eliminating low collection taxes and stimulating the formalization of labor. In Argentina, it is estimated that more than 8 million people -around 42% of the employed- work in the informal sector. Integrating this universe into the formal system, by reducing labor and regulatory costs, could radically transform the labor market and broaden the tax base to lower taxes.

Argentina faces a historic opportunity: to leave behind decades of fiscal populism and make way for a modern and competitive economy. But the road will not be easy.
Success will depend on the government's ability to build consensus, on its resistance to corporate and union pressure, and on the time that society is willing to give to a transformation process that, although painful in the short term, could lay the foundations for a freer, more stable and prosperous country.

For the first time in generations, politics, society and the economy seem to be aligned in the same direction. It is a turning point that few believed possible: a break with the old order and the birth of a new Argentina that is finally daring to change in earnest.
History will tell if this time the country manages to hold the course or if, once again, it gives in to its own ghosts. But what is certain is that the time is now.

Pablo Gonella   

Deputy Manager International Fixed Income Money Desk