Argentina’s Economic Revolution: From Successful Austerity to a Historic Gold Discovery

Argentina is undergoing a dramatic transformation under President Javier Milei’s leadership, with a massive precious metals discovery poised to act as the catalyst that shifts the country from recovery to a true economic revolution. Once on the brink of total economic collapse, Argentina now shows encouraging signs in the capital markets and key macroeconomic indicators.

Milei’s Miracles: From Collapse to Recovery

Recent data reveals a dramatic shift in Argentina’s economic trajectory. In 2024, the country closed with a trade surplus of $19 billion — the highest in its history — compared to a $7 billion deficit in 2023. This remarkable achievement signals a fundamental change in the economic structure.

Inflation, previously the harshest blow to the Argentine economy, has sharply declined. Within just 13 months, inflation plunged from 300% to 47%, an achievement considered nearly impossible on this scale. Simultaneously, the government debt-to-GDP ratio shrank from 156% to 83%, and international rating agencies, including Moody’s and S&P, recognized the improvement by upgrading the country’s credit rating for the first time in years.

A particularly notable success occurred in fiscal policy, a chronic weakness for Argentina for many years. In 2024, Milei’s government recorded a primary budget surplus of 1.8% of GDP and an overall fiscal surplus of 0.3% of GDP — the first fiscal surplus in 14 years.

Capital Markets Respond Enthusiastically

Argentina’s capital markets reflect growing optimism. The main MerVal index rose to 2,160,385 points in June 2025, an increase of 42.20% compared to the same period last year. Historically, the MerVal reached an all-time high of 2,867,774.50 points in January 2025, indicating unprecedented investor confidence.

Monthly performance remains impressive: in the past month alone, the index rose 4.88%, continuing the sustained positive trend. Analysts’ long-term forecasts are more cautious, projecting trading levels around 2,002,353 points in the next 12 months.

The Metals Discovery: A Game-Changer

A revolutionary development comes from the discovery of the Vicuña metals deposit, located along the Argentina-Chile border, which could completely reshape South America’s economic map. The deposit contains approximately 13 million tons of copper, 32 million ounces of gold, and 659 million ounces of silver, valued at over $200 billion.

The sheer size of the discovery ranks it among the largest mineral deposits globally and the most significant in the past 30 years. For comparison, Argentina’s GDP in 2023 stood at $646 billion, making the discovery worth more than one-third of the national economy.

Development will proceed under the “Vicuña” umbrella — a strategic alliance between Canadian mining company Lundin and Australian mining giant BHP. The market has already reacted, with the alliance’s stock soaring more than 10% since the announcement in early May 2025.

Remaining Challenges

Despite these impressive successes, significant challenges still obstruct full economic growth. The exchange rate stands at 1,190 pesos per US dollar, indicating the local currency remains very weak. Additionally, external debt remains high at approximately $280 billion — around 48% of GDP.

The social cost of economic recovery is steep. Improvements have come at the price of a real recession — a 1.7% decline in GDP — and a poverty rate approaching 40%, although this is a dramatic drop from 52% at the start of Milei’s tenure.

Timeline and Implications of the Metals Project

The project faces a relatively long timeline. According to initial estimates, work will begin next year, but mining operations are expected to start “delivering the goods” no earlier than 2030. The required investment is enormous: initial estimates total about $5 billion, including an upfront investment of $400 million in Argentina this year.

Milei has prepared the regulatory ground by promoting the “Large Investment Incentive Regime,” a program based on tax breaks, customs benefits, and preferential exchange rates for foreign investors investing over $200 million, with benefits lasting 30 years.

Broad Economic Effects

The influx of dollars from the metals project could solve several structural problems. A significant dollar inflow will strengthen the peso, ease inflation through cheaper import prices, increase tax revenues, and reduce debt. Additionally, it will boost foreign exchange reserves and stimulate GDP growth.

The discovery is not limited to the main deposit. Just a month ago, another massive gold mine was found in Salta province, estimated at approximately 84 million tons, indicating further growth potential for the sector.

Regional Impact and Rivalry with Chile

These developments also affect the regional geopolitical landscape. Chile, Argentina’s neighbor in the metals project, is led by populist President Gabriel Boric, who represents a starkly different approach from Milei. Boric emphasizes a nationalist strategy leveraging natural resources through state-owned companies, whereas Milei advocates complete deregulation.

This ideological contrast creates regulatory arbitrage favoring Argentina, which may attract foreign investors who prefer a more liberal business environment. This could be an opportunity for Argentina to establish itself as the regional mining hub, especially given that about half of Chile’s exports are mining-based.

Conclusions

Argentina stands at a historic crossroads. The combination of Milei’s successful economic reforms, capital market recovery, and a historic metals discovery creates a once-in-a-generation opportunity. The impressive capital market performance, dramatic inflation reduction, and fiscal surpluses indicate that the country is on the right track.

However, the economic revolution will require time, and Milei must contend with social challenges arising from austerity policies. The success of the metals project will determine not only Argentina’s future but also its status as a key player in the global metals market.