The election of Javier Milei as President of Argentina has caused a stir in the international financial market, with experts warning of the need for urgent and profound reforms. While Milei’s first speech as president-elect was characterized by unexpected moderation, the financial market believes that his plan is “bold” and could threaten financial stability.
Credit agency Moody’s Investors Service has focused on the consensus necessary to carry out the proposed reforms and on governance. “A Congress divided and social pressures will also influence the incoming president’s ability to implement corrective policies,” said Jaime Reusche, Vice President – Senior Credit Officer de Moody’s Investors Service.
JP Morgan has also placed its magnifying glass on the risks of implementing the measures announced by Javier Milei during the campaign. The US bank warned that while Milei offers a bold reform agenda, governance risks loom given the lack of party structure and also the distribution of power in Congress after the elections generals.
According to JP Morgan, it could opt for a bimonetary exchange scheme before choosing to go for a dollarization of the economy. However, this decision could not be made for another year. In the short term, upon taking office, they expect a realignment of the anticipated exchange rate, with a level consistent with the parallel exchange rate, to realign relative prices firmly, allowing capital controls to be gradually removed. Such adjustment should be accompanied by a draconian fiscal adjustment to compensate for