Focus on Congressional Response and Investor Confidence
As bond spreads narrow to their tightest levels since early February, investors are becoming more confident in the government’s ability to meet debt obligations. However, the fate of the presidential decree lies in the hands of the legislative Bicameral Commission and both houses of congress. According to Bruno Gennari from London-based fixed-income bank KNG Securities, “Investors are going to be keeping a close eye on the reaction of lawmakers who have the power to block the proposals.”
Analysts have noted that the proposed measures align with investor expectations. Therefore, any price impact on bonds is expected to be minimal. While some critics argue that the changes should have been proposed through laws approved by congress rather than by decree to avoid destabilization, President Milei defends them as necessary to address macroeconomic imbalance. Argentina is grappling with recession, triple-digit annual inflation, and a growing poverty rate.
IMF Payment and Demonstrations
On Thursday, Argentina was scheduled to make a $900 million payment to the International Monetary Fund (IMF), which it plans to settle using a $960 million bridge loan granted by CAF – Development Bank of Latin America and the Caribbean on December 15. Previously, Argentina relied on a swapline with China’s central bank and a loan from Qatar to meet IMF payments on time.
Prior to these developments, the first major planned demonstration against the new government took place on Wednesday. Protester Graciela Valdez, 63 years old, expressed her discontent, stating, “This is ripping off the country, this is impoverishing the population even more.”