Austral Insights #04

Welcome to Austral Insights, your go-to source for understanding Argentina's key developments. Each week, we bring you concise, business-focused insights into the country’s politics, economy, and strategic sectors—providing the local perspective you need to make informed decisions.

Argentina by the numbers:

*_{Emerging Markets Bond Index (JP Morgan)}
**_{The S&P MERVAL Index tracks the largest, most liquid stocks on Argentina’s exchange, meeting size and liquidity requirements}

This week’s highlights:

• Vaca Muerta Sur pipeline approved under RIGI; USD 3bn investment by a seven-company consortium.

• Experts warn Vaca Muerta could be at risk from extreme weather; urge Neuquén River dam construction to prevent floods.

• Mass protests in Buenos Aires over pension cuts & IMF deal remain largely peaceful under heavy security.

• Gov’t simplifies mining regulations, expands tax exemptions to attract investment.

• Inside Congress: Lower House approves the IMF deal, securing a key step in Milei's economic plan amid market turbulence.

• What do Argentines think about..? While approval for Milei’s administration dropped sharply, his party still leads heading into the midterms.

Energy

The Vaca Muerta Sur pipeline has become the second project approved under RIGI (Large Investment Incentives Regime). The pipeline, which will connect Vaca Muerta to a southern Atlantic port in Río Negro, is led by YPF in partnership with Vista, Pampa Energía, Pan American Energy, Pluspetrol, Chevron, and Shell. The consortium is set to invest over USD 3bn, aiming to export 550,000 barrels per day by 2027. According to Finance Minister Luis Caputo, this infrastructure will unlock Vaca Muerta’s export potential, enabling over USD 15bn in annual oil exports. The project directly addresses one of the key operational bottlenecks in Argentina’s shale sector—limited transportation capacity for growing output.

On a more cautious note, experts warn that extreme weather events—such as last week’s severe storm in Bahía Blanca—could pose serious risks to Vaca Muerta’s operations. Specialists have urged authorities to prioritize the long-awaited construction of a dam on the Neuquén River, as flooding could devastate nearby communities and compromise critical infrastructure for oil extraction and electricity supply. Given the imminence and unpredictability of climate risks, proactive investment in mitigation infrastructure is crucial—not only to protect energy operations but also to safeguard thousands of families in the region.

Social unrest

On March 19, Buenos Aires witnessed its second consecutive Wednesday of mass protests against the Milei government. This time, pensioners' demonstrations coincided with the Chamber of Deputies’ debate on the IMF decree, turning the mobilization into a wider protest against both pension cuts and the IMF deal. Unlike last week, the protests remained largely peaceful, following a heavy security deployment across key areas such as Congress and Casa Rosada.

Mining

Argentina’s Tax Authority (ARCA) and Mining Secretariat have announced the simplification and debureaucratization of the mining activity registry, aiming to streamline procedures and boost sectoral development across the value chain. Additionally, registered mining suppliers will now be allowed to request exemption certificates from income and VAT withholding regimes, reducing tax burdens.

These measures fit within Milei’s deregulation agenda, which seeks to simplify bureaucratic processes and attract investment. While Argentina’s mining sector continues to face macroeconomic, operational, and ESG-related challenges, this regulatory shift is a positive signal for investors and business leaders evaluating opportunities in the country.

Inside Congress

• The Chamber of Deputies approved Milei’s IMF decree in a highly tense session. This marks a key step in the administration’s economic program, securing congressional backing for the agreement announced last week.With this approval, Milei hopes to ease market tensions following recent turbulence, which saw Argentine stocks and bonds decline, while the parallel exchange rate and country risk surged. While global volatility remains a challenge, stabilizing the domestic front is crucial for Argentina’s economic outlook.

• Hours after the ratification of the IMF decree, the session requested by the opposition to discuss pension moratorium projects failed due to lack of quorum. Some of the proposed bills included extending pension moratorium and guaranteeing free essential medications for pensioners.

What do Argentines think about…?

A new Delfos poll reveals mixed results for the Milei administration: while public approval has sharply declined, this has not yet translated into a major drop in voting intention.

• Milei’s approval rating fell 17 points, from 50% in February to 33% in March.

• La Libertad Avanza (Milei’s party) (LLA) saw only a slight drop in voting intention, from 38.5% to 36.9%, keeping it the leading coalition for the 2025 midterms.

But what’s behind this sharp decline in approval?

• The $LIBRA scandal damaged the government’s transparency image, a key area where Milei has positioned himself against Kirchnerismo.

• The appointment of Supreme Court justices by decree fueled criticism of institutional overreach and weakened Milei’s anti-establishment credentials.

• The government’s response to the Bahía Blanca tragedy was widely perceived as lacking social sensitivity.

• Economic frustration persists—while inflation has slowed down, many Argentines still don’t feel a tangible improvement in their daily lives.

Despite declining approval, LLA remains the strongest political force heading into the midterms. However, delivering concrete economic results will be crucial to regaining public support. Given recent market volatility and economic uncertainty, this will be a challenging path to navigate—one we’ll continue to monitor in the coming editions.

Are you interested in the risks and opportunities that Argentina presents? Is there an issue you’d like to discuss or understand in greater depth? Reach out for a free 30-minute talk at [email protected].

See you next week with more insights!