Against the background of a difficult legacy of macroeconomic imbalances, Argentina has embarked on an ambitious and unprecedented reform process to stabilise the economy. Reforms have started to bear fruits, and the economy is set for a strong recovery. Inflation has fallen to levels not seen in years. The upfront fiscal consolidation process started in late 2023 has been instrumental to taming high inflation. Still, fiscal policy will require further fine-tuning to maintain fiscal prudence in the medium to long-term while boosting potential growth. A comprehensive tax reform, phasing out a few particularly distortionary taxes and broadening income and consumption tax bases, would enhance efficiency and equity. Tax compliance could be improved by further strengthening and modernising the tax administration. Enhancing the flexibility of labour markets and lowering social security contributions for low-income workers would reduce the costs of formalisation and increase opportunities. More training and education opportunities, well-aligned with labour market needs, would encourage more people to participate in training. Maintaining the reform momentum towards a better business climate and continuing to reduce barriers to domestic and international competition, while also improving the quality of public services and strengthening public sector integrity, can boost investment and lift productivity growth.
THEMATIC CHAPTERS: FOSTERING FORMALISATION; ENERGY TRANSITION; BUSINESS ENVIRONMENT
