U.S. Treasury Secretary Scott Bessent expressed the U.S. government’s readiness to offer Argentina a credit line through the Exchange Stabilization Fund if global shocks threaten President Javier Milei’s economic policies. Following his remarks, Argentina’s bonds rose significantly, indicating increased investor confidence and reduced political risks related to Peronism, while underscoring the importance of U.S. support in Argentina’s economic recovery efforts.
U.S. Treasury Secretary Scott Bessent indicated that the Trump administration would potentially provide Argentina with a designated credit line should global economic shocks threaten President Javier Milei’s economic reform initiatives. This information was conveyed to three individuals who were privy to Bessent’s remarks made during a JPMorgan Chase & Co. event in Washington.
The U.S. government is prepared to utilize the Exchange Stabilization Fund (ESF) to assist Argentina under circumstances beyond its control, contingent upon Milei’s adherence to his economic policies. This statement underscores a commitment to support Argentina in times of turmoil.
Following Bessent’s comments, Argentina’s bonds experienced a significant uptick, outperforming many other emerging markets. For example, benchmark notes set to mature in 2035 appreciated by as much as one cent, trading around 66 cents on the dollar, as noted by Bloomberg’s pricing data.
Market analysts attribute the rise in Argentine assets to Bessent’s public remarks, suggesting they have fostered increased confidence regarding U.S. support for Milei during potential crises. Carolina Gialdi, head of international sales at Max Capital in Buenos Aires, highlighted that this assurance could mitigate political risks associated with the potential resurgence of Peronism in Argentina.
The ESF, established in the 1930s, has facilitated numerous credit transactions by the U.S. Treasury to foreign governments and central banks to stabilize their currencies, as detailed on the Treasury’s website. Bessent’s recent comments seem to extend beyond his prior statements made during an interview with Bloomberg News, where he expressed admiration for Milei’s reform agenda.
During his recent visit to Buenos Aires, Bessent acknowledged the potential for U.S. involvement with the ESF, citing, “At the end of the day, we have the Exchange Stabilization Fund, too. We haven’t committed to being part of that, but could be.” His previous engagements with the Milei administration played a crucial role in Argentina’s successful acquisition of a $20 billion program from the International Monetary Fund earlier this month.
The U.S. Treasury’s willingness to back Argentina through the Exchange Stabilization Fund reflects a strategic support of President Javier Milei’s economic reforms. The positive reaction in bond markets underscores both investor confidence and reduced political risks associated with a revival of Peronism. Bessent’s remarks, situated within a broader historical context of U.S. financial assistance to other nations, highlight the significance of international economic partnerships and support during times of uncertainty.
Original Source: batimes.com.ar
