The Trump administration publicly committed on Monday to provide comprehensive support for Argentina’s embattled economy, extending a crucial lifeline to President Javier Milei. This comes just weeks before significant legislative elections in the country.
Treasury Secretary Scott Bessent outlined a range of potential interventions from the United States, including providing loans to Argentina’s central bank, executing direct currency purchases, and acquiring U.S. dollar-denominated Argentine government debt through the Treasury’s Exchange Stabilization Fund. These measures aim to stabilize Argentina’s economy, which has seen its currency, the peso, decline sharply due to growing uncertainties surrounding President Milei’s political stability.
In a public statement on social media, Mr. Bessent emphasized Argentina’s critical role, stating, “Argentina is a systemically important U.S. ally in Latin America, and the U.S. Treasury stands ready to do what is needed within its mandate to support Argentina.”
Former President Trump has openly lauded Mr. Milei as his “favorite president,” recognizing a shared political philosophy. This strong personal connection has translated into a significant strengthening of diplomatic and economic ties between the United States and Argentina. Argentina’s economic stability is crucial for U.S. interests, particularly in the ongoing competition with China for influence in Latin America and the global pursuit of vital strategic minerals like lithium, of which Argentina holds substantial reserves.
For decades, Argentina has grappled with persistent economic instability. President Milei, a self-proclaimed radical libertarian, assumed office in late 2023 and swiftly implemented aggressive austerity measures. His policies have focused on drastically cutting government spending and subsidies to tackle severe fiscal imbalances and rampant inflation.
Despite his efforts, Mr. Milei has recently encountered significant political hurdles. These include a substantial defeat in provincial midterm elections, a corruption scandal involving medical contracts linked to his sister, Karina Milei, and the overturning of three presidential vetoes by Congress. These overturned vetoes reinstated funding for crucial public health and education programs, measures Milei had argued were detrimental to the fiscal stability he champions as his administration’s hallmark.
Earlier in the year, President Milei eased Argentina’s currency controls. However, the central bank recently intervened aggressively, selling off substantial foreign currency reserves in an attempt to stabilize the peso, which has continued its steep decline.
Just last week, Argentina’s central bank injected over $1 billion into the market to prop up the peso, striving to maintain its exchange rate against the dollar below the threshold established in a $20 billion agreement with the International Monetary Fund earlier this year.
Argentina is slated to make nearly $10 billion in debt repayments to the International Monetary Fund during the first half of 2026. Remarkably, Argentina’s outstanding commitments represent about 35 percent of the I.M.F.’s total global support, which currently stands at approximately $164 billion. Since 1958, the nation has secured 23 loan packages from the I.M.F., a testament to its long history of economic challenges.
Mark Sobel, a former senior Treasury official and current U.S. chairman of the Official Monetary and Financial Institutions Forum, attributed the recent peso crisis to a significant erosion of market confidence. This lack of trust stems from President Milei’s political struggles and doubts about his performance in the upcoming elections. Sobel acknowledged that Milei’s stringent fiscal and monetary policies were appropriate for addressing Argentina’s chronic over-borrowing, which has historically led to hyperinflation and numerous defaults.
While praising Milei’s attempts to halt Argentina’s cycles of over-borrowing and defaults, Mr. Sobel pointed out a critical failure: the administration’s inability to effectively manage the country’s currency.
“Milei’s Achilles’ heel,” Mr. Sobel concluded, “was the peso’s artificial overvaluation, a direct result of a persistent refusal to allow the currency to settle at a true market value. This significant vulnerability has now manifested itself in the current crisis.”
The news of Mr. Bessent’s announcement was met with enthusiasm by investors, including major U.S. fund managers, causing Argentina’s bond prices to surge. The yield on the country’s dollar-denominated 10-year government bond, a key indicator of borrowing costs, dropped notably from over 17 percent to approximately 15 percent. Simultaneously, the peso saw a strengthening of roughly 2 percent against the U.S. dollar.
Alejo Czerwonko, chief investor officer for emerging markets at UBS Global Wealth Management, remarked, “Argentina’s economy and financial assets were in desperate need of a circuit breaker — and they certainly received one today.” He added that Bessent’s statements are particularly impactful at this delicate moment, offering the Milei administration a vital opportunity to regroup before the October midterm elections.
However, a degree of caution persisted among some investors, who expressed a desire for more concrete details regarding the practical implementation of Mr. Bessent’s promised support.
Graham Stock, an emerging market strategist at RBC BlueBay Asset Management, highlighted this sentiment: “The devil is in the detail, of course, first in terms of what support actually materializes and second in terms of what conditions are attached.”
Mr. Bessent also announced plans for a meeting with Mr. Milei and Mr. Trump in New York on Tuesday.
In his statement, Mr. Bessent optimistically declared, “Opportunities for private investment remain expansive, and Argentina will be Great Again.”
President Milei, in a post on X (formerly Twitter), expressed his gratitude to Mr. Bessent and Mr. Trump for their “unconditional support.”
“Those of us who defend the ideas of freedom must work together for the well-being of our peoples,” Mr. Milei concluded, emphasizing a shared ideological bond.
Additional reporting was contributed by Joe Rennison and Lucía Cholakian Herrera.