According to Rob Citrone, founder of Discovery Capital Management, the Argentine economy is undergoing a transformation process that could boost its credit rating and attract billions in investments. These developments underscore the increasing capital flows to Argentina as global investors recognize the country’s potential for sustained growth.
According to Citrone,, Argentina is at a decisive stage in consolidating its economic growth. The fund manager highlighted the possibility of the country achieving investment-grade status during a potential second term of Javier Milei, provided structural reforms are deepened. Citrone emphasized that capital flows to Argentina could be bolstered significantly if reforms are implemented effectively.
“President Milei has a real plan, and if he were reelected and further deepened the reforms significantly, there is a good chance that Argentina could achieve investment grade by the end of 2031,” Citrone stated in an exclusive interview with Bloomberg en Línea. He also noted that Milei could cement “stability in Argentina for years, decades, and generations to come,” creating the ideal environment for increased capital flows to Argentina from both domestic and international investors.
Factors Behind Investment-Grade Status
Investment-grade status, awarded by firms such as Moody’s, S&P, and Fitch, reflects a country’s ability to meet its financial obligations. Its benefits include lower interest rates for debt issuance, greater attraction of foreign investment, and increased economic stability.
Citrone explained that Milei’s reforms aim to improve fiscal solvency, economic growth, and the financial system’s robustness—key factors in obtaining the coveted rating. “I believe his popularity, which is at very high levels, will continue to grow this year, especially with the economy improving: people on the streets will strongly feel the positive momentum in the country,” he stated. Such momentum could further accelerate capital flows to Argentina, positioning it as a leading investment destination in Latin America.
The investor also highlighted significant economic progress in 2024, such as increased exports, the accumulation of $21 million by the Central Bank, and the reduction of inflation and country risk. According to him, Argentina is transitioning from a phase of macroeconomic stabilization to sustained growth, setting the stage for higher capital flows to Argentina.
Optimistic Economic Projections
Citrone projected economic growth of over 6% this year, accompanied by inflation below 19%—figures he described as “phenomenal for the country.” He also anticipated the ruling party’s strong performance in midterm elections, which could facilitate the approval of new structural reforms.
“I believe productivity in Argentina will improve, and there’s a clear focus on achieving this,” said the Discovery founder. Among the structural reforms that could be implemented, he mentioned the possibility of deeper labor reforms to enhance the country’s competitiveness in international markets.
Regarding external debt, Citrone highlighted that Argentine bonds, such as the Global 29 and 30, could continue reducing their yields to around 8%, a significant drop from the previous year’s levels. “It’s hard to find a spread compression like that anywhere else in the world,” he remarked.
The Impact of Foreign Exchange Controls
One of Citrone’s bets is on eliminating foreign exchange controls, which, he argued, could lead to a massive influx of capital flows to Argentina. “It will amount to multiple billions of dollars. $20 billion wouldn’t surprise me,” he said, referring to a combination of foreign direct investment and inflows into financial assets.
The investor noted that the current exchange rate does not hinder the competitiveness of Argentine exports. “Argentina remains competitive at this exchange rate. It’s about reducing costs and increasing productivity. You don’t grow your exports by $27 billion in a year if you have an issue with the exchange rate,” he asserted.
Citrone supported the government’s decision to reduce the pace of the crawling peg from 2% to 1% monthly. “It was an excellent decision, as it will further help reduce inflation and lower inflation expectations,” he said.
Discovery’s Winning Bets in Argentina
Discovery Capital Management’s portfolio in Argentina, representing 60% of its exposure in Latin America, delivered a 52% return in 2024 thanks to strong bets on Argentine assets. Key positions included:
- Grupo Financiero Galicia (GGAL): The fund’s most prominent position, with a 340% increase in 2024. “Galicia is a major beneficiary of macroeconomic stability and the growth we’ll see in credit,” said Citrone, who expects an additional 40% appreciation potential in 2025.
- Vista Energy (VIST): A 79% rise last year.
- YPF (YPF): Up 164%, with further growth prospects in 2025.
- BBVA Argentina (BBAR): Recorded a gain exceeding 400%.
- Adecoagro (AGRO): The only position that ended the year in the red, with a 12% decline. Despite this, Citrone defended the investment, arguing it is “a very low-risk investment with an annual return of 7–10% to shareholders.”
“Galicia is our largest position globally. We believe the growth capacity in credit is enormous, and bank profitability should increase dramatically,” he emphasized.
Regional Perspectives
In contrast to his optimistic view on Argentina, Citrone was cautious about Brazil, where he maintains short positions. “It’s about leadership. And I’m uncomfortable with the leadership I currently see in Brazil,” he said.
The investor predicted a political shift in the neighboring country during the 2026 elections, where he expects a center-right candidate to win. In the meantime, he warned of fiscal risks and a negative impact on economic growth.
On the other hand, Citrone expressed optimism about the United States’ economic prospects and its impact on Latin America. “I believe the U.S. economy will maintain solid growth, which will benefit the Americas and the Western Hemisphere,” he concluded.