The United States has initiated talks with Argentina regarding a $20 billion economic support program, aiming to stabilize the South American nation’s markets and bolster its embattled leader, Javier Milei. The announcement, made by US Treasury Secretary Scott Bessent, has led to a rebound in the Argentine peso, which gained 1.8 percent to reach 1360 pesos to the dollar. This development comes as Milei, a close ally of US President Donald Trump, faces challenges in easing market concerns ahead of midterm elections that could determine the fate of his austerity agenda.
The proposed support program includes a $20 billion swap line, with Washington also expressing readiness to purchase Argentina’s dollar bonds. According to Bessent, the US stands ready to provide necessary support to Argentina, as stated by President Trump. In response, Milei expressed gratitude to the US president and Bessent for their “support and confidence.”
In a recent address to the UN General Assembly, Milei praised President Trump for his migration and trade policies, which he believes have saved the United States and the world from “catastrophe.” The Argentine leader acknowledged that his country is not alone in making difficult decisions, citing President Trump’s efforts to reverse a perceived decline in the US.
The talks between the US and Argentina involve discussions on swap lines, which typically entail two central banks agreeing to exchange currencies at a set rate for a specified period. However, it remains unclear whether the US Federal Reserve is involved in these negotiations. Additionally, the US Treasury has indicated its willingness to provide “stand-by credit” from its exchange stabilization fund.
Milei also met with Kristalina Georgieva, the managing director of the International Monetary Fund (IMF), which provided Argentina with a $20 billion loan agreement in April. Georgieva described the meeting as “very constructive” and reaffirmed the IMF’s support for Argentina’s efforts to stabilize its economy, reduce inflation, and boost growth prospects.
The Trump administration’s plans to support Argentina have drawn criticism from Senator Elizabeth Warren, the top Democrat on the Senate Banking Committee, who has expressed concerns about the use of Treasury funds to “bailout” a foreign government. Bessent responded by highlighting the opportunities for economic stabilization in Latin America, which he believes were missed during the Obama administration.
The development has significant implications for Argentina’s economic stability and its upcoming midterm elections. As the country navigates its economic challenges, the international community will be closely watching the outcome of these talks and their potential impact on the region.
