U.S. Treasury Secretary Scott Bessent expressed the Trump administration’s readiness to offer Argentina a credit line via the Exchange Stabilization Fund if economic shocks threaten President Javier Milei’s reforms. Bessent’s comments led to a rise in Argentine bonds, as market analysts saw this as a sign of potential U.S. support amid political risks.
United States Treasury Secretary Scott Bessent has indicated a potential willingness from the Trump administration to grant Argentina a specific credit line should a global economic shock threaten President Javier Milei’s reform efforts. This support would come through the Exchange Stabilization Fund (ESF), contingent on Milei’s adherence to his economic policies, as noted by sources who heard Bessent speak at a JPMorgan Chase & Co. event in Washington.
In response to these remarks, Argentina’s bonds increased in value during Tuesday’s trading, becoming some of the best performers in emerging markets. Notably, benchmark notes due in 2035 climbed as much as one cent to around 66 cents on the dollar, based on pricing data from Bloomberg. Analysts credited Bessent’s comments for this rise, indicating heightened expectations that the U.S. would stand behind Milei if a crisis were to emerge.
Carolina Gialdi, head of international sales at Max Capital in Buenos Aires, remarked that investor confidence grew from the notion that support from the U.S. could mitigate the political risks associated with the possible resurgence of the Peronist movement in Argentina. The ESF, established in the 1930s, has historically facilitated over a hundred credit disbursements and loans by the U.S. Treasury to bolster foreign currencies.
Bessent’s recent statements extend his previous comments made during an interview with Bloomberg News in Buenos Aires, where he commended Milei’s reform agenda as exemplary for other Latin American nations favoring market-oriented policies. During this visit, he mentioned the potential capability of the ESF without making a definitive commitment to its use.
Additionally, the Trump administration played a pivotal role in Argentina’s recent acquisition of a $20 billion program from the International Monetary Fund, further underscoring the support for Milei’s economic strategies.
In conclusion, U.S. Treasury Secretary Scott Bessent’s remarks signal a strong potential for U.S. support towards Argentina should economic challenges arise, contingent on the continuance of President Javier Milei’s reform agenda. The acknowledgment of the Exchange Stabilization Fund as a support mechanism highlights a proactive U.S. stance, aiming to stabilize Argentina’s economy amidst political uncertainties, particularly concerning the historical influence of Peronism. This strategic backing has already had a positive impact on Argentine bonds, reflecting market confidence in the sustainability of current economic policies.
Original Source: batimes.com.ar
