U.S. Treasury Secretary Scott Bessent is open to providing Argentina a credit line through the Exchange Stabilization Fund to support President Milei’s economic reforms. His remarks have boosted Argentine bonds in emerging markets, reflecting growing confidence in U.S. backing. This potential assistance comes on the heels of Argentina’s recent $20 billion IMF program.
U.S. Treasury Secretary Scott Bessent indicated that the Trump administration is prepared to extend a specific credit line to Argentina if global events hinder President Javier Milei’s economic reforms. According to individuals familiar with his remarks, this assistance would potentially be sourced from the Exchange Stabilization Fund (ESF) provided that Milei adheres to his economic strategies.
Bessent’s comments, made during a JPMorgan Chase & Co event in Washington, were positively received, resulting in an increase in Argentine bonds which were among the best performers in emerging markets on Tuesday. Specifically, benchmark bonds due in 2035 rose to approximately 66 cents on the dollar, as reported by Bloomberg.
Analysts attributed the rise in Argentine assets to Bessent’s assertion regarding U.S. support during crises. Carolina Gialdi from Max Capital noted, “Bonds rose because there’s an increasing expectation that the U.S. will have Milei’s back in the case of a crisis,” suggesting that U.S. assurance may alleviate political risks associated with the return of populism.
The Exchange Stabilization Fund (ESF), established in the 1930s, has historically been utilized by the U.S. Treasury for over a hundred instances of credit and loans to foreign entities to help stabilize currencies, according to reliable sources. Bessent’s recent remarks expand upon previous comments made during his visit to Buenos Aires, where he acknowledged Milei’s reform agenda as exemplary for other Latin American pro-market governments.
This potential support from the Trump administration is significant, particularly following Argentina’s recent success in securing a $20 billion program with the International Monetary Fund, marking a critical step in supporting the nation’s economic stability.
In summary, U.S. Treasury Secretary Scott Bessent signaled a willingness to provide Argentina with a credit line from the Exchange Stabilization Fund to support its economic reforms if necessary. The response from the market has been favorable, indicating confidence in the U.S. backing for President Milei’s administration. These developments may play a crucial role in stabilizing Argentine assets and mitigating political risks associated with shifting governance.
Original Source: batimes.com.ar
