US Treasury Secretary Scott Bessent has stated that the US is ready to do what is needed to help stabilize Argentina's escalating financial turmoil.
All options for stabilization are on the table, Bessent wrote on social media, designating Argentina as a systematically important US ally in Latin America.
This message has contributed to calming financial markets, which have experienced turmoil due to recent election losses that raised doubts regarding Javier Milei's cost-cutting free-market agenda.
Amidst this crisis, the value of Argentina's peso has been declining, creating a challenging environment for stock and bond investors.
President Milei, a libertarian economist and Trump ally, was elected in 2023 as an outsider promising to reign in soaring inflation with radical budgetary reforms.
Maintaining a stable peso is pivotal to fulfilling these promises; however, the currency's value has plummeted, prompting concerns among investors regarding the government's ability to stabilize it. In recent efforts, Argentina's central bank intervened by spending $1.1 billion of its reserves to bolster the peso, ultimately placing the country in a precarious debt repayment position.
Bessent indicated that the US is contemplating potential interventions, such as purchasing Argentine pesos and dollar-denominated government debt, among other supportive actions. Details regarding these measures are likely to emerge after Trump meets with Milei in New York on Tuesday.
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, he stated.
Milei has expressed enormous gratitude for the US support, which has led to a rise in Argentine stock prices and an uptick in prices for the country’s dollar-denominated debt in the markets.
He emphasized on social media that collaboration among those advocating for freedom is essential for the welfare of their respective nations.
Milei was the first foreign leader to meet Trump after the latter's victory in the November 2024 US presidential election, and his economic plans have gained favor among conservative circles in the US, including prominent figures like Elon Musk.
However, Milei is facing challenges domestically as his government deals with recent electoral losses and a bribery scandal surrounding his sister, accused of accepting kickbacks from pharmaceutical firms seeking government contracts.
Argentina will hold national mid-term elections in October, which are expected to serve as a referendum on Milei's contentious policies, including substantial cuts to social programs.
Notably, Bessent also played a significant role in assisting Argentina in securing a $20 billion loan from the International Monetary Fund earlier this year.
