U.S. Treasury Secretary Scott Bessent indicated a willingness to offer Argentina a credit line via the Exchange Stabilization Fund, contingent on economic policy adherence by President Milei. Following his comments, Argentina’s bonds saw a positive reaction, reflecting heightened investor confidence in the government’s fiscal strategies. The ESF has history in assisting foreign governments stabilize their currencies, marking a significant U.S. support mechanism.
In a recent event hosted by JPMorgan Chase & Co in Washington, U.S. Treasury Secretary Scott Bessent signaled that the U.S. government is prepared to offer Argentina a specific credit line to assist in safeguarding President Javier Milei’s economic reform efforts against possible global shocks. This support would be facilitated through the Exchange Stabilization Fund (ESF), contingent upon Milei maintaining his economic policies.
Following Bessent’s remarks, Argentina’s bonds saw significant increases, becoming among the top performers in emerging markets. Notably, benchmark notes due in 2035 rose up to one cent, trading at approximately 66 cents on the dollar. Analysts attribute this bond rise to growing confidence that the U.S. will support Milei in the event of a crisis, which would mitigate fears regarding the potential resurgence of Peronism.
The ESF, established in the 1930s, has historically been utilized for over a hundred credit transactions by the U.S. Treasury to assist foreign governments and central banks in stabilizing their currencies. Bessent’s comments reflect a more concrete commitment than those made previously, reinforcing the U.S. support for Argentina during his visit to Buenos Aires, where he commended Milei’s reform agenda as exemplary for other Latin American governments.
The U.S. government, under Secretary Scott Bessent, has expressed its readiness to assist Argentina in navigating potential economic crises through a credit line, provided that President Milei adheres to his reform agenda. This development has positively influenced Argentina’s bond market, reflecting rising investor confidence and a reduced risk of political upheaval. The Exchange Stabilization Fund may play a pivotal role in this support strategy, underscoring the importance of U.S.-Argentina economic relations amidst challenges.
Original Source: batimes.com.ar
