The Arithmetic of Decelerating Hyperinflation
Math does not negotiate. Argentina learned this the hard way through decades of deficit spending, but as of October 25, 2025, the narrative has shifted from political theory to raw ledger entries. The primary fiscal surplus, which reached 1.2 trillion pesos in September 2025, represents the ninth consecutive month of black ink for the Treasury. This is not a policy preference; it is a structural liquidation of the inflationary engine. By eliminating the need for the Central Bank (BCRA) to print money to fund the executive branch, the government has forcibly cooled the velocity of circulation.
The latest data from the National Institute of Statistics and Censuses (INDEC) confirms that monthly inflation for October 2025 has settled at 1.9 percent. This is a staggering collapse from the 25.5 percent recorded in December 2023. The mechanism is simple yet brutal. The government capped the monetary base, allowing the real demand for money to catch up with the existing supply. Critics point to the 52 percent poverty rate as the cost of this stabilization, yet the administration argues that the inflationary tax was a more regressive form of wealth destruction.
Visualizing the 2025 Disinflationary Trend
The Liquidation of Remunerated Liabilities
The core of the 2025 economic overhaul was the migration of the BCRA’s interest-bearing debt, formerly known as Leliqs and later Pases, into Treasury-backed LEFIs (Fiscal Liquidity Bills). This move effectively transferred the cost of monetary policy from the Central Bank’s balance sheet to the Treasury. On October 23, 2025, the BCRA reported that the quasi-fiscal deficit has been effectively neutralized. This structural change is what allowed the International Monetary Fund (IMF) to greenlight the latest 800 million dollar disbursement earlier this week.
However, the balance of payments remains fragile. Net International Reserves (NIR) are still hovering near negative 4 billion dollars. While the trade balance has been positive due to a record soybean and corn harvest in Q2 2025, the demand for hard currency to pay for imports remains high. The Bopreal bonds, designed to settle importer debt, have absorbed significant peso liquidity, but they represent a future dollar liability that the Treasury must service.
Operational Benchmarks for Q4 2025
| Metric | Current Value (Oct 2025) | YoY Change |
|---|---|---|
| Official USD/ARS | 1,015 | +22% |
| Monthly CPI | 1.9% | -88% (Relative) |
| Primary Surplus | 1.2T ARS | N/A (From Deficit) |
| Country Risk (EMBI) | 940 bps | -1,100 bps |
The Cepo Paradox and Capital Flight Risk
The largest remaining hurdle is the ‘Cepo’ or the complex web of capital controls. As of today, the gap between the official exchange rate and the ‘Blue’ market rate has compressed to less than 15 percent. This convergence is a prerequisite for lifting controls, but the BCRA remains cautious. Total lifting of the Cepo risks a sudden spike in the USD/ARS exchange rate if the demand for greenbacks exceeds the current thin reserve levels. The government’s strategy of ‘Competencia de Monedas’ (Currency Competition) is the proposed endgame, where the Peso coexists with the Dollar as legal tender.
Institutional investors are currently weighing the ‘Milei Premium’ against the risk of social unrest. While the fiscal numbers are pristine, the real economy is in a deep V-shaped recovery that has not yet reached the lower-middle class. Industrial production indices showed a 2.4 percent uptick in September, the first positive reading in eighteen months, yet consumption in the retail sector remains 12 percent below 2023 levels. The sustainability of the fiscal surplus depends on the political will to maintain austerity as the 2025 mid-term election cycle concludes and the focus shifts to 2026 debt obligations.
The quantitative reality is that Argentina has stopped the bleeding, but it has not yet started the growth engine. The next critical milestone is the March 2026 debt maturity wall, where the Treasury must roll over or repay 4.2 billion dollars in foreign currency obligations. All eyes remain on the NIR levels; any dip further into the negative will signal that the disinflationary miracle is hitting a hard ceiling of dollar scarcity.
