The risk of a country that does not decrease enough, its reasons and the Swiss example

Argentina remains the highest in Latin America—and one of the highest in the world—among countries that honor their debt. Why does the market continue to punish Argentina?

There are at least eight factors that, with varying weight, explain this anomaly:

The 2020 default was absolutely unnecessary. It was a political decision made with an adversarial logic towards the creditors. That attitude—of arrogance, willingness to do harm for political gain, or simply out of superlative financial ignorance—generated enormous reputational damage.

Although the scheme was significantly relaxed in 2025, the persistence of restrictions on the exchange market —whose continuity was confirmed by the Central Bank— maintains a structural risk premium. When it was implemented in 2019, it also generated significant losses for external investors who carried out carry-trades, which are the same ones who invest in sovereign bonds.

3. Hoarding dollars

Argentines have never fully trusted their currency (except with conversion mechanisms): they bought USD 32,000 million since the partial liberalization of the stocks in 2025 and more than USD 10,000 million in the first four months of 2026 (more than what was purchased by the BCRA in that period and double the trade surplus of goods and services), to put them largely outside the local system. This was possible because since the beginning of this administration, around USD 48.7 billion in public and private debt have entered, which sooner or later will have to be paid with interest. No stabilization program has been able to reverse the historical distrust in currency and compliance with regulations (confiscation of deposits, corralito, corralón, etc.). This pattern, sooner or later, reproduces the reserve bottleneck that ended too many times in foreign debt defaults.

Es hard to explain that total exports of goods and services went from US$83.5 billion in 2023 to US$105.15 billion in 2025—largely thanks to the energy surplus enabled by the gas pipeline built under the previous management and better harvests—while the consolidated net debt of the Treasury and the BCRA increased from US$371.449 million in November 2023 to US$ 379,221 million in March 2026, despite two years of fiscal surplus. The BCRA’s net reserves as of that date are slightly below the levels of November 2023, which has been reversed since then thanks to the record of mining and energy exports. This acceleration in the accumulation of reserves in the last two months is slowly beginning to have a favorable impact on the country’s risk.

5. Debt rating and ratios

Large index funds buy Argentine bonds because they have to, not because they want to, and their demand does not move the price. The active funds, which do move it, for the most part cannot have rated debt in highly speculative territory in their portfolio due to mandate restrictions. Risk rating agencies place Argentina between six and seven steps below investment grade, and point to the lack of sustained reserve accumulation as a risk factor. In the stock market, Argentina is not classified as an emerging market or a frontier market by the MSCI—but rather as “standalone”, the lowest level. This categorization indirectly affects the price of sovereign bonds, removing the country’s credibility.

In 2017 the market thought that Cambiemos would remain in power for 8 or more years and that lasting change was coming. In 2018 they began to doubt and in 2019 the fears were confirmed that ended with the default of Fernández and Guzmán. All current changes are reversible, Unfortunately, and at any time the Central Bank can spuriously finance the Treasury again. The convertibility law was repealed and the deposit intangibility law was flagrantly violated with all the rights acquired under it six months after its approval. A world record.

7. The monetary anchor dilemma

If the monetary anchor is relaxed, the risk is that inflation will not consolidate downwards. The current program is similar to that of Collor de Mello and not to the Real Plan – saving the enormous distances – and for now the market awaits evidence of its long-term continuity.

8. The fragility of collection

The absorption of pesos by the Treasury and the BCRA to sterilize reserve purchases compressed liquidity in pesos, temporarily affecting credit, activity and collection. This has raised doubts about the sustainability of the primary fiscal surplus, especially with a change of government. 2026 will be crucial for the fate of the program, especially because Argentina has a long tradition of deteriorating its macroeconomic variables in electoral cycles. The market knows this, and discounts it in advance. The consolidation of the change, the economic recovery and the improvement of some of these points can lead to a much lower country risk in January 2028, or even sooner. That may help the Government place a bond on the market close to 7% this year, clearing up doubts temporarily but not indefinitely. The risk of returning to the past will always be present.

That could be resolved with an orderly dollarization, the easiest and fastest way which has been widely studied by a group of local and international experts. An alternative would be to modify the National Constitution as the Swiss did in its article 126 in 2003, approved by a majority of 83% of its population, establishing strict rules on indebtedness, and the prohibition of spurious financing to the Treasury (art. 99 of the Constitution and art. 11 of the Law of its National Bank). Have around 400 basis points of country risk It is not an irrational anomaly. It is the price that Argentines pay for their long history without having clear rules or breaking them arbitrarily and with relative frequency.