Washington Pledges Aid to Argentina and a Trump-Aligned Leader in Crisis

U.S. Signals Strong Backing for Argentina and Milei Amid Economic Strain

Washington Weighs Multiple Options

Treasury Secretary Scott Bessent announced that the United States is considering a wide range of measures to shore up Argentina’s faltering economy. Potential steps include loans to Argentina’s central bank, direct interventions in currency markets, and the purchase of dollar-denominated Argentine debt through the Treasury’s Exchange Stabilization Fund. These moves are designed to stabilize the peso, which has plunged recently due to doubts about President Javier Milei’s political standing.

Bessent emphasized on social media that Argentina remains a critical U.S. partner in Latin America and that the Treasury is ready to act within its mandate to safeguard the country’s financial system.

Milei and Trump’s Political Bond

President Donald Trump has openly embraced Milei, calling him his “favorite president” and presenting him as a political ally. This relationship has reinforced Argentina’s strategic value to Washington at a time when the U.S. is competing with China for influence in the region and for access to key minerals such as lithium.

Since taking office in late 2023, Milei — who defines himself as a radical libertarian — has slashed subsidies and government spending to combat chronic inflation and deficits. However, his reform program has been rattled by setbacks, including a poor showing in provincial elections, corruption allegations linked to his sister Karina Milei, and several defeats in Congress where lawmakers overturned his vetoes on health and education funding.

Struggles With the Peso and the IMF

In recent months, Argentina’s central bank has sold billions in reserves to defend the peso after Milei loosened currency controls earlier in the year. Last week alone, more than $1 billion was spent to keep the exchange rate within limits agreed under a $20 billion IMF deal.

Argentina remains the IMF’s largest debtor, accounting for about 35% of its outstanding support worldwide. With nearly $10 billion in repayments due in 2026, the country faces ongoing pressure to stabilize its finances.

Analysts Weigh In

According to Mark Sobel, a former senior Treasury official, Milei’s fiscal and monetary tightening program is necessary to break Argentina’s cycle of over-borrowing and defaults. However, he warned that Milei’s reluctance to allow the peso to float freely has become a major vulnerability. “That weakness has now come home to roost,” Sobel said.

Market Reaction

The U.S. announcement was welcomed by investors, with Argentine bond prices rising and the yield on its 10-year dollar bonds dropping from above 17% to around 15%. The peso also gained roughly 2% against the dollar. Analysts such as Alejo Czerwonko of UBS Global Wealth Management said the statement acted as a much-needed “circuit breaker” ahead of Argentina’s legislative elections.

Still, other investors urged caution, noting that the real impact depends on the scale and conditions of any U.S. assistance. “The devil is in the details,” said Graham Stock of RBC BlueBay Asset Management.

Looking Ahead

Bessent confirmed that he and President Trump plan to meet Milei in New York, highlighting opportunities for private investment and declaring, “Argentina will be Great Again.”

On social media, Milei expressed gratitude for Washington’s “unconditional support,” stressing that those who champion liberty must collaborate for the prosperity of their nations.