\t\t\t \t\t\t\t\t \t\t\t\t\t Argentina could be forced to devalue its currency or default on its debt, warned a report by the Congressional Research Service (CRS), the United States Congress\u2019s public think tank.<\/p>\n
The document, dated December 30 but made public this week, said that \u201cArgentina\u2019s main source of foreign currency is the remaining balance on its currency swap line with the United States,\u201d which both countries struck in October.<\/p>\n
The swap line, part of the U.S. Exchange Stabilization Fund (ESF), totals US$20 billion, of which, according to private estimations, Argentina used over US$2 billion. Neither the Central Bank nor the Economy Ministry confirmed the amount the country spent, which is new debt with the United States Treasury.<\/p>\n
The report is part of an evaluation by the U.S. Congress of Donald Trump\u2019s aid to Argentina. If it has \u201cconcerns\u201d over the loan, the legislative body \u201ccould, for example, limit the Treasury Secretary\u2019s ability to use ESF funds to support foreign governments or require the Treasury Secretary to disclose details about ESF operations involving foreign governments,\u201d the CRS document stated.<\/p>\n
It added that Congress could alternatively endorse \u201cgreater financial support to Argentina.\u201d<\/p>\n
Milei under review The report also delves into Argentina\u2019s situation over the past two years, under Javier Milei\u2019s presidency. It concluded that the administration\u2019s \u201ceconomic reforms have had mixed results.\u201d\u00a0<\/p>\n
\u201cThe economy is growing, inflation is down, and the government is running a budget surplus,\u201d the report said. However, the document also mentioned the fluctuation in unemployment figures \u2014 with unemployment somewhat going down after a surge, but with a growth in informal jobs \u2014 and the \u201cprotests against the government\u2019s spending cuts.\u201d\u00a0<\/p>\n
\u201cThe Central Bank\u2019s foreign-exchange assets are largely offset by foreign exchange liabilities, and Argentina does not have a strong trade surplus to generate inflows of foreign currency,\u201d the report said.\u00a0<\/p>\n
\u201cIf the Milei government finds itself without the adequate foreign exchange to make debt payments and sustain exchange rate policy goals, it will likely face difficult policy decisions, such as whether to default on its debt for a tenth time or allow more flexibility in the value of the peso,\u201d it added, saying that, under such a scenario, the government could seek additional financial support from the United States, the International Monetary Fund (IMF), or other lenders.\u00a0<\/p>\n
\u201cThe prospects for securing such support are unclear,\u201d the report added.<\/p>\n
The CRS mentioned the currency run ahead of the October 26 midterm legislative elections, during which \u201cto keep the peso in the exchange rate band, Argentina\u2019s Central Bank intervened in foreign exchange markets\u201d by selling U.S. dollars.\u00a0<\/p>\n
\u201cHowever, there were questions about how long the Central Bank could sustain this policy. For example, in one three-day period, it sold more than $1.1 billion in foreign currencies,\u201d it detailed.\u00a0<\/p>\n
\u201cGoing forward, questions persist about the stability of the Milei administration\u2019s exchange rate policies and Argentina\u2019s ability to honor looming increases in scheduled debt payments,\u201d the document said, adding that there are doubts about whether the country would remain on track with its program with the IMF.<\/p>\n","protected":false},"excerpt":{"rendered":"
Argentina could be forced to devalue its currency or default on its debt, warned a report by the Congressional Research Service (CRS), the United States Congress\u2019s public think tank. The document, dated December 30 but made public this week, said that \u201cArgentina\u2019s main source of foreign currency is the remaining balance on its currency swap […]<\/p>\n","protected":false},"author":10,"featured_media":24001,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[971,42,81,982,7211],"tags":[5011,96,596,7209,7210],"class_list":["post-24000","post","type-post","status-publish","format-standard","has-post-thumbnail","category-debt","category-economics","category-international-relations","category-swap","category-u-s-congress","tag-debt","tag-economics","tag-international-relations","tag-swap","tag-u-s-congress"],"_links":{"self":[{"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/posts\/24000","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/comments?post=24000"}],"version-history":[{"count":0,"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/posts\/24000\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/media\/24001"}],"wp:attachment":[{"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/media?parent=24000"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/categories?post=24000"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/service.codeus.ca\/index.php\/wp-json\/wp\/v2\/tags?post=24000"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}