In mid-July, JPMorgan’s EMBI+ index for Argentina, which indicates the interest rate Argentina would incur for foreign borrowing, reached 402 basis points, marking its lowest point since April 2018. As time progressed, the likelihood of surpassing the 400-point threshold steadily diminished. Although the economic team did not explicitly aim for the JPMorgan index to dip below 400 points, there are multiple justifications for why such a development would be advantageous. Initially, this would signify a reduction in the cost of financing for the Argentine government. Second, it signifies a form of “psychological barrier”—not solely due to it being the lowest reading of the Milei administration, but also the lowest level in over eight years, since April 20, 2018, during Mauricio Macri’s presidency. This Friday, August 15, country risk closed at 469 points, reflecting a 16.6% rebound from that low.
Argentina’s country risk currently aligns with that of Ecuador and Bolivia, exceeding Mexico and Colombia’s by more than double, approaching four times that of Brazil and Peru, nearly five times that of Chile, and slightly over six times Uruguay’s EMBI+ index. The think tank Fundación Mediterránea contended that Argentina exhibits “better fiscal variables than much of the region,” however, its country risk is unlikely to fall below 400 basis points. What accounts for the resilience of Argentina’s index in the face of prevailing economic challenges? Analysts indicate that the situation is fundamentally rooted in structural issues. The primary factor is the insufficient reserves at Argentina’s Central Bank (BCRA for its Spanish acronym). As of December 2025, gross reserves were estimated to be merely 6% of GDP, according to the think tank’s analysis. In contrast, the regional average stands at 16.3% of GDP.
Even so, analysts observed that the BCRA has acquired approximately US$13.5 billion thus far in 2026, which presently constitutes nearly 7.8% of GDP. Restrictions on international capital movements — known as the corporate “cepo” — also help elucidate current country-risk levels. The historical pattern of debt defaults in recent decades incurs a reputational cost reflected in the interest rate. Another factor could add to the mix, according to the think tank: the risk of a “drastic shift in economic policy” that Argentina faces “at every presidential election over the past two and a half decades.” It is an element that “remains in play” for the 2027 election and that “surely” weighs on the current level of local country risk.
Eric Ritondale stated that the recent shift in country risk “reflects a mix of external and local factors.” On the domestic front, he acknowledged that recent weeks had seen “a slight decoupling” from Argentina’s main comparable countries. He contended this “can be explained by market pricing in the electoral cycle earlier than usual,” following the release of certain opinion polls and confidence indicators that indicated a “marginal” pullback in support for the government. On the global front, he explained that the elevated level of the Federal Reserve’s interest rates “has put pressure on” fixed-income assets in emerging markets generally, “contributing to the widening of local country risk.”
