Argentina markets cheer Milei's 'ambitious' zero deficit budget

BUENOS AIRES (Reuters) -Argentina's sovereign bonds and stock index climbed in early trading on Monday, as investors cheered an ambitious 2025 budget plan from libertarian President Javier Milei, that predicts robust growth and sticks to a "zero" fiscal deficit.

Argentina's S&P Merval sock index hit an intraday record high against its previous peak registered at the beginning of the month. Bonds, which have rallied strongly since Milei took office in December, were up around 1%.

On Sunday Milei had told Congress his 2025 budget would stick by his key pledge to establish a fiscal surplus and that he would veto any bills that threatened his zero deficit plan.

Milei, a right-wing former economist, has taken tough austerity measures to overturn years of fiscal deficits, tackle rampant inflation and stabilize the economy. He has called a balanced budget non-negotiable.

The draft budget foresees the economy expanding 5% in 2025, inflation dropping from over 250% now to some 18% by the end of next year, and the exchange rate weakening to 1,207 pesos per dollar by end-2025 from 960 per dollar now. There would be a primary fiscal surplus of 1.3% of gross domestic product (GDP).

"The new budget bill is very ambitious... but now we will have to see if it is approved and what it really looks like in practice," said analyst Marcelo Rojas.

"The fact though that the government is committed to not spending more than it collects is already an achievement."

(Reporting by Jorge Otaola; Writing by Brendan O'Boyle; Editing by Lisa Shumaker)