U.S. Signals Support for Argentina’s Economic Reform Through Potential Credit Line

U.S. Treasury Secretary Scott Bessent expressed the Trump administration’s willingness to offer Argentina a credit line via the Exchange Stabilization Fund, contingent on President Milei’s adherence to economic reforms. This announcement led to a rise in Argentine bond values, indicating market confidence in potential U.S. support amid global uncertainty.

United States Treasury Secretary Scott Bessent has indicated a willingness of the Trump administration to extend a credit line to Argentina should a global economic disturbance threaten President Javier Milei’s economic reforms. This information was shared by three informed sources following Bessent’s remarks at a JPMorgan Chase & Co. event in Washington.

Bessent stated that the U.S. government would consider utilizing the Exchange Stabilization Fund (ESF) to provide support to Argentina under circumstances beyond its control, granted that President Milei remains committed to his economic policies.

In response to Bessent’s comments, Argentina’s bonds experienced a notable increase during trading on Tuesday, emerging as top performers within emerging markets. Bonds due in 2035 increased by up to one cent, trading at approximately 66 cents on the dollar, according to Bloomberg pricing data.

Market analysts attribute the rise in Argentine assets to Bessent’s remarks, highlighting an increased perception of U.S. support for Milei’s administration in times of crisis. Carolina Gialdi, from Max Capital in Buenos Aires, noted that avoiding a crisis could alleviate political risks related to the potential resurgence of Peronism, a political movement with historical significance in Argentina.

The ESF has played a vital role since its establishment in the 1930s, facilitating over a hundred loans to foreign governments and central banks aimed at stabilizing currencies, as detailed on the Treasury’s website. Bessent’s statements seem to reinforce his previous comments made during a visit to Buenos Aires, where he lauded Milei’s reform agenda as exemplary for similar governments in the region.

During his April visit, Bessent mentioned the ESF and expressed the possibility of U.S. involvement without making any firm commitments. The recent developments may have played a key role in Argentina’s successful negotiations for a $20 billion support program with the International Monetary Fund (IMF) earlier this month.

In conclusion, United States Treasury Secretary Scott Bessent has indicated potential U.S. support for Argentina’s economic reforms through a credit line backed by the Exchange Stabilization Fund. This potential backing may provide reassurance to investors, resulting in favorable movements in Argentine bonds. Bessent’s comments reflect a continuing commitment of the U.S. administration towards supporting Milei’s agenda, thus contributing to financial stability in the region.

Original Source: batimes.com.ar