The election of Javier Miley as the new President of Argentina has sparked mixed reactions on Wall Street, with some analysts expressing optimism while others voicing concerns over the potential impact on financial stability. While Miley’s campaign promises bold reforms to address the country’s economic imbalances, such as dollarization and closing the Central Bank, these measures could have unintended consequences if not implemented carefully.
Jaime Reusche, vice president – senior credit officer at Moody’s Investors Service, believes that implementing these reforms will be a challenge given the lack of party structure and distribution of power in Congress after the general election. He warns that political maneuvering could hinder the implementation of bolder reforms, especially dollarization. Meanwhile, JP Morgan also cautions against rushing into any decisions too quickly and urges for a draconian fiscal adjustment to compensate for any loss of seigniorage income.
Barclays echoes these concerns and notes that social challenges could pose Miley’s biggest obstacles to success. Economic results will be key in determining whether he is able to maintain support among middle-income voters and sustain long-term growth prospects. As such, it is important for Miley to prioritize both economic stability and social cohesion in his policies moving forward.