US announces it will do ‘whatever is necessary to support Argentina’

Javier Milei’s unconditional support for Donald Trump is beginning to bear fruit. At a time when the Argentine president is going through his weakest moment politically and his economic plan is faltering, the Republican administration of the United States announced that it “is willing to do whatever is necessary within its mandate to support Argentina.” This support, Treasury Secretary Scott Bessent explained, could take the form of a currency swap, the purchase of foreign currency, or the purchase of Argentine debt denominated in dollars. A Trump bailout would bolster Milei’s hopes of stabilizing the South American country’s currency, reassuring the financial markets and improving his prospects for the October 26 legislative elections.

The announcement came Monday, minutes before the markets opened in Argentina and on the eve of Milei’s departure for New York, where she is scheduled to meet with Trump and Bessent on Tuesday before participating in the United Nations General Assembly. “Huge thanks to Secretary Scott Bessent and President Donald Trump for their unconditional support for the Argentine people,” Milei said in a message on social media.

Argentina is experiencing a whirlwind of financial volatility, and the Milei administration is failing to stem the peso’s decline against the dollar. In the last three days of last week, the Argentine Central Bank had to sell a total of $1.11 billion of its meager reserves to maintain the floating exchange rate regime in force in the foreign exchange market. In this critical context, Milei revealed on Friday that he was negotiating a loan from the United States Treasury to help him meet $8.5 billion in debt maturities next year.

“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,” Bessent confirmed Monday in a message on X.

The Treasury Secretary added that “all options for stabilization” of the Argentine economy are being considered and specified three of the alternatives under analysis: a currency swap agreement between central banks, the direct purchase of Argentine pesos with U.S. dollars, or the acquisition of Argentine debt denominated in dollars through the Treasury Stabilization Fund.

The public confirmation of the bailout eased a start to the week that was expected to be difficult for Argentine markets. The country’s stocks and sovereign bonds posted strong gains on Monday, following days of sharp decline. The official dollar fell 3% at opening. The country risk — the spread between Argentine debt and U.S. debt — followed the news with a 17% drop compared to Friday, reaching the 1,200-point range.

In addition to the negotiations with the United States, Milei has taken another measure in search of foreign currency. The far-right administration decided Monday to suspend the collection of export duties on agricultural products, the country’s main source of revenue. The measure will be in effect until October 31 — that is, five days after the legislative elections — or until the liquidation reaches a value of $7 billion.

“The old politics seeks to generate uncertainty in order to boycott the government’s program,” said government spokesman Manuel Adorni, justifying the decision. “With the aim of generating a greater supply of dollars during this period, there will be zero withholding taxes on all grains until October 31,” Adorni added. The elimination of export withholding taxes is a repeated demand from the agricultural sector, which insists that they be permanent and not temporary.

Since taking office in December 2023, Milei’s economic plan has been based on a cheap dollar in pesos to contain inflation, severe fiscal adjustment, and deregulation of the economy. At least since the beginning of the second quarter of this year, Argentina has been in a precarious financial situation.

Thanks to Trump’s political support, the government agreed to a $20 billion bailout with the International Monetary Fund last April — to which the country still owes another $40 billion — and achieved a measure of calm, but it lasted barely three months. The far-right’s crushing defeat by Peronism in the legislative elections in the province of Buenos Aires earlier this month exposed the political weakness of a government with little parliamentary support and precipitated a new wave of uncertainty.

Sign up for our weekly newsletter to get more English-language news coverage from EL PAÍS USA Edition