BUENOS AIRES, April 9 (Reuters) - Argentina's Banco

Galicia, buying HSBC's ( HSBC ) local assets in a near $500 million deal,

is betting that new libertarian President Javier Milei will

bring down soaring inflation and ease rates to boost lending in

the South American nation.

The local financial group's chief executive Fabian Kon told

Reuters after the HSBC ( HSBC ) deal was confirmed that Milei's

pro-market approach and tough fiscal policies should benefit the

banking sector and help bring down inflation running over 275%.

"As Argentina converges to lower inflation rates and lower

interest rates you will see an explosive increase in credit," he

said in a phone interview.

Monthly inflation is expected to cool to near 10% in March,

which is likely to prompt a cut to the benchmark rate.

Milei, who took office in December, has moved to slash state

spending to overturn a deep fiscal deficit, with surpluses at

the start of the year boosting investors and propelling bonds to

years-long highs. The peso currency has also gained.

The country, however, is experiencing sharply rising poverty

levels and a slide in economic activity amid the tighter

conditions, with the latest warning light being industrial

output, which slumped around 10% in February year-on-year.

Kon said, however, that the tighter fiscal regime was

essential to restoring macroeconomic stability in the country

that has gone through damaging cycles of economic crisis for

years, with regular defaults on its sovereign debt.

"Argentina is a country that has been historically

undisciplined, so it needs fiscal discipline and with fiscal

discipline, inflation is a mathematical impossibility," he said.

"We see a downward path for inflation."

He added that right-wing economist and former pundit Milei's

focus on markets and deregulation would eventually spur

investment - and with it the economy.

"The freedom of the markets helps investments," he said.

The bank, part of Grupo Financiero Galicia, is

hoping the HSBC ( HSBC ) deal - part of the global bank's broader pivot

towards Asia - would strengthen its own position domestically.

"What we are looking for is growth in an increasingly

competitive environment where a bank's investment is basically

technology," he said.