WASHINGTON—Few countries have done more than Argentina to give “political risk” its meaning. It has defaulted on sovereign debt nine times and repeatedly trapped investors’ money behind capital controls. Presidential elections have become moments to brace for reversal: in recent decades, some brought currency and price controls and fights with creditors, while market-friendly governments offered only a brief opening for investors before the pendulum swung back. In 2023, as inflation surged toward a year-end rate above 200 percent, voters turned to Javier Milei, a libertarian outsider who promised to take a chainsaw to the state. Whether his election to the presidency marks a lasting break with that pattern or simply another swing is the question hanging over the October 2027 general election.
Argentina has made real progress since 2023: inflation has fallen sharply, the budget is balanced, most capital controls have been lifted, and the major rating agencies have upgraded the country’s debt. Yet growth has been uneven and job creation has lagged, particularly in sectors outside mining and energy.
A year out, many investors are treating the vote as a binary bet on whether Milei’s reforms will survive, yet the risk of a wholesale reversal is lower than that framing suggests. The mining and energy sectors now have defenders across the political spectrum, and a broader consensus on fiscal discipline appears to be taking hold. The more pressing risks are a run on the peso before the vote and the fragility of protections outside the resource sector, where access to foreign exchange, legal certainty, and tax stability are far from guaranteed.
Why investors keep moving the goalposts
Argentinian officials have a familiar complaint about foreign investors: every time the government scores, the goalposts move. During the first half of Milei’s term, investors sought a new International Monetary Fund (IMF) program, the lifting of most capital controls, and proof of political support in the October 2025 midterm elections. The administration delivered on all three, but Argentina’s track record of economic and policy volatility still deters significant foreign investment outside of energy and mining. Executives at multinational companies I have spoken with now view Milei’s reelection as the next goalpost.
Milei has repeatedly invoked riesgo kuka, his term for investors’ fear of a return to Kirchnerism, the left-wing populist movement, to explain such hesitation. Speaking in late September in New York, for example, he blamed a recent rise in Argentina’s country-risk premium on opposition figures. Financial investors appear to share this anxiety, as signs of a weakening economic recovery make Milei’s reelection less certain: output contracted 0.6 percent in the second quarter compared with the first, and poverty rose to 32.3 percent in the first half of 2026, although it remained well below the 41.7 percent recorded in the second half of 2023.
The government’s narrative around riesgo kuka reinforces the idea that Argentina’s reforms depend on a single electoral outcome, encouraging investors to bet on Milei’s political fortunes rather than on the durability of the economic framework. A more useful question, however, is how much that framework already constrains whoever comes next.
A reversal is harder than it looks
Several structural forces would make it costly for another government to veer from current economic policies, at least in export-oriented sectors such as energy and mining. First, as global demand increases for Argentina’s natural resources, realizing the potential of the Vaca Muerta shale formation and world-class lithium and copper deposits will require sustained investment. As Milei noted in a speech at an oil and gas expo in October, Argentina’s shift from an energy deficit to a surplus exceeding ten billion dollars has already improved the country’s ability to meet its financing needs. Any future national government would have strong reasons to protect those dollar earnings.
Argentina’s provincial governments also have a direct stake. Under a 1994 constitutional reform, provinces own the natural resources of their territory. As Fernando Straface of Universidad Austral has observed, international investors are therefore increasingly meeting with governors directly to negotiate resource deals. Implementation of the Andes-Atlantic Corridor, launched by Washington and Buenos Aires in September to link Vaca Muerta and Argentina’s mineral-rich northwest to Atlantic ports, will also depend heavily on provincial authorities.
Argentinian governors also exercise immense influence in the Senate, and they often wield it to defend these economic interests. When the Senate voted in February to modify the Glaciers Law, a reform the mining provinces had pushed, senators from those provinces backed it across party lines—including Peronists from Catamarca and San Juan, members of the movement that forms Milei’s principal opposition. Governors in these provinces and their Senate allies are counting on foreign investment and have strong reasons to oppose policies that would jeopardize it.
This cross-party support was also on display to investors at the 2026 Argentina Week roadshows in New York and Paris, where multiple governors, including Peronists, signaled their support for the country’s economic direction. Still, if the national government changes, it remains an open question whether this broad backing for orthodox economic policy in energy and mining will also extend to more politically sensitive sectors such as manufacturing, concentrated in populous provinces like Buenos Aires.
The US-Argentina relationship adds another constraint, though a less certain one. Argentina’s critical minerals and strategic position near Antarctica and shipping routes between the Atlantic and Pacific oceans give Washington an interest in the country’s stability and in limiting Beijing’s influence in the region. Concern about China’s dominance over mineral supply chains extends across party lines. But Milei has tied the relationship closely to President Donald Trump and the Republicans, and Democrats sharply criticized last year’s twenty-billion-dollar swap line. If the political balance in Washington shifts after the 2028 elections, the strategic interest is likely to endure, but the political and financial backing may not.
Perhaps the strongest constraint is recent memory. Argentinians came close to hyperinflation in 2023, helping propel Milei to the presidency. His most durable legacy may prove to be a broader acceptance of fiscal discipline, which has been the core of his economic program. His La Libertad Avanza party fared well in the 2025 midterms despite deep spending cuts, and it secured Senate approval for a balanced budget for 2026 without holding a majority. Even within the opposition, many moderate Peronists describe a fiscal surplus as necessary.
Elections can still shake markets
The more immediate risk is pre-election financial turmoil. The electoral field is far from settled, and Milei’s principal challenger need not be a Kirchnerist or even a Peronist; a candidate promising continuity on economic policy would reduce the risk considerably. If a candidate associated with past policies gains ground in the polls, however, Argentinians may shift their savings into dollars and foreign investors may sell bonds, regardless of the campaign’s assurances. Such a selloff risks lasting damage even if the next government ultimately retains the reforms. Pressure on the peso could revive inflation and force the central bank to spend reserves or raise interest rates, with investment and lending potentially stalled for months.
The electoral calendar could add to the volatility. If the Milei administration succeeds in suspending the open primaries, it could avoid a repeat of 2019, when the primary results triggered immediate economic turmoil, but it would still concentrate the risk in a single vote in October 2027. Meanwhile, many governors will hold provincial elections before the national vote, and a series of losses for the government’s candidates, such as their September 2025 defeat in Buenos Aires province, could unsettle markets well before then.
Minister of Economy Luis Caputo routinely touts Argentina’s greater financial buffers, including a current account back in surplus and higher gross central bank reserves, but confidence remains fragile. Washington could provide an additional cushion if needed: in early October, Treasury Secretary Scott Bessent said the United States could offer financial support in the event of pre-election volatility, as it did before Argentina’s 2025 legislative elections.
The risk of a two-speed economy
A second, slower-moving risk is that economic stability is concentrated in a handful of sectors and large projects. The Incentive Regime for Large Investments (RIGI) offers qualifying projects long-term tax, customs, and foreign-exchange stability, while companies outside it still face high taxes, regulatory changes, and uncertainty over legal enforcement. For many investors I have spoken with, RIGI’s biggest draw is access to international arbitration, an avenue for enforcing commitments outside domestic courts. As administrative law professor Ezequiel Cassagne has argued, those enforcement mechanisms, together with the regime’s contractual protections, raise the cost to a future government of reneging on those commitments. Without broader investment and job creation, however, support for the reforms may remain concentrated among resource-sector investors and governors.
Extending that confidence to the wider economy will require broader institutional reform. A more predictable and efficient judicial system would strengthen protections for businesses beyond RIGI, and tax reform that lowers rates and keeps them stable would encourage broader investment.
Honoring commitments also means complying with international legal obligations. Argentina has made important progress, notably reaching a $171 million settlement this year with the last holdout creditors from its 2001 sovereign debt default. Resolving outstanding international arbitration awards involving foreign investors would send a further signal that the country now honors its word and help rebuild investor confidence.