A Surprising Exchange in Bangkok
At a panel during the International Monetary Fund and World Bank assembly in Bangkok, Thailand, Argentina's Economy Minister Luis Caputo defended his government's fiscal program, tax cuts, and investment outlook. He shared the stage with IMF Managing Director Kristalina Georgieva, Eurogroup President and Greek Finance Minister Kyriakos Pierrakakis, Thai Deputy Prime Minister and Finance Minister Ekniti Nitithanprapas, and Nigerian Central Bank Governor Olayemi Cardoso.[S1]
When asked whether tax reductions and corporate incentives could lead to a fiscal situation that no longer requires financing from the IMF or World Bank, Caputo called it a major challenge for Argentina and one that has existed from the start. Georgieva then remarked in a relaxed tone that Argentina would be like Greece and repay before the agreement's deadline. Caputo replied that she would be surprised.[S1][S2][S3][S4][S5][S6][S7][S8]
A History of Crises and a New Path
Caputo explained his response by pointing to Argentina's economic trajectory, noting a poor record over the past hundred years, with 22 crises, nine defaults, and the removal of 13 zeros from the currency. He said the administration had to seek stability and go further to create predictability for investors, which led to a special regime for large investments. He also stated that the government had ordered the inherited economic disaster without breaching any contracts, always respecting the inviolability of contracts and private property, something he said Argentina had never done before.[S1]
The minister claimed that companies from various sectors have expressed interest in investing in the country, and he mentioned an investment program worth USD 200 billion for the coming years, equivalent to about one-third of Argentina's GDP. He argued this would improve productivity and growth, create more and better jobs, and ensure sustainability for the foreseeable future, adding that they are very optimistic.[S1]
Fiscal Achievements and Political Outlook
Caputo said the government eliminated a fiscal deficit equivalent to five points of GDP in the first month of its mandate, not by raising taxes but by reducing public spending by 30 percent. He rejected the idea that fiscal consolidation inevitably carries a political cost, noting that the president's popularity is significantly higher than that of predecessors who managed significant deficits. He also said the program did not have a recessionary effect, citing three consecutive years of growth and a reduction in inflation from 211 percent in 2023 to 30 percent now, still high but a good disinflation process.[S1]
He listed figures he attributed to the current administration's economic evolution: more than 500,000 jobs created, poverty reduced from 57 percent to 32 percent, lifting nearly a quarter of the population out of poverty, and record exports with fiscal, trade, and current account surpluses. He said the government would continue reducing the state's role in the economy by eliminating more taxes, having already removed three points of GDP in taxes, and cutting regulations to make Argentina the freest country in the world, as the president wants.[S1]
On political risk ahead of the 2027 elections, Caputo downplayed concerns, saying Argentine voters would not choose a return to previous policies. He cited the midterm elections, claiming the ruling party won by 17 points despite what he described as a significant political attack from the opposition. He said the Argentine people learned the hard way, and that the opposition was not a safe refuge, as President Milei won by a crushing 17-point margin.[S1]
