The U.S. government has announced its readiness to provide financial backing to Argentina amid growing economic instability, reinforcing support for President Javier Milei ahead of key legislative elections. Treasury Secretary Scott Bessent confirmed that tools such as loans to Argentina’s central bank, direct purchases of its currency, and acquisitions of dollar-denominated sovereign debt from the Exchange Stabilization Fund could be deployed to bolster the nation’s financial standing. n nArgentina’s peso has weakened recently, reflecting investor skepticism about Milei’s political stability and economic management. Bessent emphasized Argentina’s strategic importance in Latin America, stating the Treasury Department is prepared to act within its authority to sustain the country’s economy. n nPresident Trump has publicly praised Milei, referring to him as his “favorite president,” and their alignment has strengthened bilateral ties. Argentina’s role is gaining significance for the U.S. as it seeks to counter Chinese influence in the region and secure access to critical minerals like lithium, which the country possesses in abundance. n nMilei, who identifies as a radical libertarian, took office in late 2023 and implemented sweeping austerity measures, including slashing public spending and eliminating subsidies, to tackle chronic inflation and fiscal deficits. However, recent challenges have undermined his momentum, including a significant loss in provincial elections, a corruption allegation linked to his sister Karina Milei, and legislative reversals of his budget vetoes related to health and education funding. n nEarlier in the year, currency controls were relaxed, but the central bank has since intervened heavily, selling over $1 billion in foreign reserves this month alone to defend the peso and maintain its exchange rate below a cap established in a $20 billion agreement with the International Monetary Fund. n nArgentina faces nearly $10 billion in IMF repayments in the first half of 2026. With about 35 percent of the IMF’s $164 billion in active lending directed to Argentina, the country remains one of the institution’s largest borrowers, having received 23 loan packages since 1958, according to the Peterson Institute for International Economics. n nMark Sobel, former Treasury official and current U.S. chairman of the Official Monetary and Financial Institutions Forum, noted that Milei’s economic reforms are fundamentally sound but criticized his handling of exchange rates. “Milei’s program of tough fiscal and monetary tightening has been the right medicine,” Sobel said, “but his reluctance to allow the peso to reach a market-driven value has become a critical vulnerability.” n nFinancial markets reacted positively to Bessent’s announcement. Argentina’s dollar-denominated 10-year bond yields dropped from above 17 percent to around 15 percent, signaling improved investor confidence. The peso appreciated by approximately 2 percent against the U.S. dollar. n nAlejo Czerwonko, chief investment officer for emerging markets at UBS Global Wealth Management, described the U.S. statement as a much-needed “circuit breaker” that gives the Milei administration breathing room before the October midterms. n nNonetheless, some analysts, including Graham Stock of RBC BlueBay Asset Management, cautioned that the actual impact depends on the specifics of the support and any attached conditions. n nBessent revealed plans to meet with Trump and Milei in New York to discuss further cooperation. He expressed optimism about Argentina’s investment climate, declaring, “Opportunities for private investment remain expansive, and Argentina will be Great Again.” Milei responded on social media, thanking both leaders for their “unconditional support” and calling for unity among advocates of freedom. n
— News Original —nU.S. Pledges Support for Argentina’s Economy and Javier MileinThe Trump administration pledged on Monday to do whatever is necessary to support Argentina’s struggling economy, throwing a lifeline to the country’s embattled president, Javier Milei, ahead of legislative elections there next month. n nTreasury Secretary Scott Bessent said that the United States is prepared to offer loans to Argentina’s central bank, direct currency purchases and purchases of U.S. dollar-denominated Argentine government debt from Treasury’s Exchange Stabilization Fund to keep Argentina’s economy afloat. The value of Argentina’s currency, the peso, has fallen in recent weeks amid concerns about Mr. Milei’s political grip on government. n n“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,” Mr. Bessent wrote on social media. n nPresident Trump has embraced Mr. Milei, whom he has described as his “favorite president,” as a kindred political spirit. Because of their close relationship Mr. Trump has deepened ties between the United States and Argentina, amplifying its strategic significance. Argentina’s economy is increasingly important to the United States as it competes with China for influence in Latin America and scours the globe for strategic minerals such as lithium, which Argentina possesses. n nArgentina’s economy has been facing crises for decades. Mr. Milei describes himself as a radical libertarian and since taking office in late 2023 he has introduced policies to curb fiscal imbalances and inflation by slashing government spending and reducing subsidies. n nBut Mr. Milei has suffered setbacks of late, including a double-digit defeat in provincial midterms; a corruption scandal over medical contracts tied to his sister, Karina Milei; and three congressional votes that overturned his vetoes and restored funding for public health and education. He argued those measures threatened the fiscal balance that he promotes as his signature achievement. n nEarlier this year, Mr. Milei loosened Argentina’s currency controls but this month its central bank aggressively sold foreign currency reserves to support the peso, which has been declining sharply. n nLast week, Argentina’s central bank spent more than $1 billion to shore up the peso and keep its exchange rate with the dollar below the ceiling set earlier this year in a $20 billion agreement with the International Monetary Fund. n nThe country faces nearly $10 billion in debt payments to the I.M.F. in the first half of 2026. Of the I.M.F.’s roughly $164 billion in support outstanding to countries around the world, Argentina accounts for about 35 percent. Argentina has received 23 loan packages from the I.M.F. since 1958, according to the Peterson Institute for International Economics. n n“The latest Argentina peso crisis was triggered by lost market confidence in Milei’s ability to perform well in upcoming elections after a number of political setbacks,” said Mark Sobel, a former longtime Treasury official who is now the U.S. chairman of the Official Monetary and Financial Institutions Forum. “Milei’s program of tough fiscal and monetary tightening has been the right medicine to stop Argentina’s habitual over-borrowing, which had caused decades of hyperinflationary bouts and serial defaults.” n nMr. Sobel said that the Milei government has been right to try to stop Argentina’s over-borrowing problem, which has led to several defaults. However, he said, Mr. Milei has not successfully managed Argentina’s currency. n n“Milei’s weak spot was the peso’s overvaluation due to a stubborn unwillingness to let the peso find a market-clearing level,” Mr. Sobel said. “That glaring weakness has now come home to roost.” n nInvestors, which include large fund managers in the United States, cheered the announcement from Mr. Bessent, which sent the country’s bond prices soaring. The yield, which moves inversely to the price, on the country’s dollar-denominated 10-year government bond, fell from over 17 percent, to around 15 percent. The yield is indicative of the interest rate the government can borrow at over a decade. The peso also strengthened roughly 2 percent against the dollar. n n“Argentina’s economy and financial assets were in desperate need of a circuit breaker — and they sure got one today,” said Alejo Czerwonko, chief investor officer for emerging markets at UBS Global Wealth Management. “Bessent’s comments carry outsized weight at this fragile juncture. They provide the Milei administration with a critical window to reorient ahead of October’s midterms.” n nBut some investors said they needed more details about what support Mr. Bessent was willing to provide in practice. n n“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,” said Graham Stock, an emerging market strategist at RBC BlueBay Asset Management. n nMr. Bessent said that he and Mr. Trump would meet with Mr. Milei in New York on Tuesday. n n“Opportunities for private investment remain expansive, and Argentina will be Great Again,” Mr. Bessent wrote. n nIn a post on X, Mr. Milei thanked Mr. Bessent and Mr. Trump for their “unconditional support.” n n“Those of us who defend the ideas of freedom must work together for the well-being of our peoples,” Mr. Milei said. n nJoe Rennison and Lucía Cholakian Herrera contributed reporting.
