US President Donald Trump is about to bail out Javier Milei’s Argentina with the South American nation teetering on the brink of bankruptcy.
After suffering a devastating bout of market volatility that has sent its finances crashing, the Trump administration are set to intervene with a promise to “make Argentina great again.”
Scott Bessent, the US treasury secretary, said “all options are on the table” to support the country ahead of a lifeline meeting scheduled for today.
The offer of an economic lifeline comes after president Mr Milei, a close ally of Donald Trump, has spent $1.1bn (£820m) of the country’s $20bn reserves to prop up the peso.
Mr Bessent and the US president are scheduled to meet Mr Milei in New York as they seek to ease fears over the plunging peso and prevent Argentina from tipping into a debt-repayment meltdown.
This will prove crucial to maintaining the Argentine president’s reform agenda, boosting markets and averting a political crisis.
“We remain confident that President Milei’s support for fiscal discipline and pro-growth reforms are necessary to break Argentina’s long history of decline,” Mr Bessent said.
“Opportunities for private investment remain expansive, and Argentina will be great again.”
He said the US could use Treasury funds to buy up the peso or Argentine government bonds, or the Federal Reserve could strike a currency-swap deal with Argentina’s central bank.
Argentina already has a $5bn swap arrangement with China. This deal was renewed in April, fuelling concern in Washington that Mr Milei, a vocal admirer of Mr Trump, was now playing both sides of the geopolitical fence.
But Mr Milei’s recent stinging election loss and a corruption scandal involving his sister have handed the US an opening to gain more influence over his beleaguered administration.
Mr Milei on Friday said negotiations with the US were “very advanced, and it’s a matter of time”.
The president’s political fortunes plummeted following an election in Buenos Aires Province earlier this month, when parties backing him won only 34% of the vote.
Support for the big-state Peronist party Fuerza Patria and its allies surged to 47%, prompting a sharp drop in markets.
Mr Milei has already signalled he may increase welfare spending this year, partially reversing a swingeing austerity drive that has dominated his agenda so far.
Last week, tens of thousands of protesters marched through Buenos Aires demanding higher health and education spending.
Mr Milei needs to keep voters and financial markets onside, but faces the challenge of making $9.5bn in debt repayments next year.
To get Argentina into a position to repay debt and quash double-digit inflation, he has been trying to keep the peso strong.
Luis Caputo, the economy minister, said last week that the government would “sell to the very last dollar” to support the currency, which has fallen almost 10% since the recent election result.
Inflation has been reined into the single digits, but nervous traders have pushed up yields on Argentina’s dollar-denominated government bonds, and sold off shares in some of the country’s biggest companies.
The IMF approved a fresh $20bn loan in April, including an unusually large $12bn upfront disbursement, to replenish the central bank’s reserves and help Milei relax currency controls.
However, Argentina has since fallen far short on the IMF programme’s targets for rebuilding hard currency reserves, which Argentina will need in the long run to repay bondholders and stabilise the peso.
IMF managing director Kristalina Georgieva welcomed Bessent’s announcement of fresh support on X on Monday, saying it “underscores the crucial role of partners in promoting strong policies for stabilization and growth for the benefit of the people of Argentina”.
