US pledges support for Argentina’s economy and a Trump ally in crisis

Treasury Secretary Scott Bessent listens as President Donald Trump speaks to reporters in the Oval Office of the White House in Washington, Sept. 5, 2025. The Trump administration pledged on Monday, Sept. 22, 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. (Haiyun Jiang/The New York Times)

By ALAN RAPPEPORT and COLBY SMITH

The Trump administration pledged earlier this week to do whatever is necessary to support Argentina’s struggling economy, throwing a lifeline to the country’s embattled president, Javier Milei, before legislative elections there next month.

Treasury Secretary Scott Bessent said 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 Milei’s political grip on government.

“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 wrote on social media.

President Donald Trump has embraced Milei, whom he has described as his “favorite president,” as a kindred political spirit. Because of their close relationship 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.

Argentina’s economy has been facing crises for decades. 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.

But 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.

Earlier this year, Javier 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.

Last 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 this year in a $20 billion agreement with the International Monetary Fund.

The country faces nearly $10 billion in debt payments to the IMF in the first half of 2026. Of the IMF’s roughly $164 billion in support outstanding to countries around the world, Argentina accounts for about 35%. Argentina has received 23 loan packages from the IMF since 1958, according to the Peterson Institute for International Economics.

“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. chair 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 overborrowing, which had caused decades of hyperinflationary bouts and serial defaults.”

Sobel said the Milei government has been right to try to stop Argentina’s overborrowing problem, which has led to several defaults. However, he said, Milei has not successfully managed Argentina’s currency.

“Milei’s weak spot was the peso’s overvaluation due to a stubborn unwillingness to let the peso find a market-clearing level,” Sobel said. “That glaring weakness has now come home to roost.”

Investors, which include large fund managers in the United States, cheered the announcement from 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%, to around 15%. The yield is indicative of the interest rate the government can borrow at over a decade. The peso also strengthened roughly 2% against the dollar.

“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.”

But some investors said they needed more details about what support Bessent was willing to provide in practice.

“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.

Bessent said he and Trump would meet with Milei in New York on Tuesday.

“Opportunities for private investment remain expansive, and Argentina will be Great Again,” Bessent wrote.

In a post on the social platform X, Milei thanked Bessent and Trump for their “unconditional support.”

“Those of us who defend the ideas of freedom must work together for the well-being of our peoples,” Milei said.