Treasury Chief Confirms Full Support for Struggling Argentina

US Treasury Secretary\’s Assurance on Argentina Support

US Treasury Secretary Scott Bessent has reaffirmed the agency\’s readiness to provide necessary support to Argentina, following recent discussions about an economic aid program. This statement comes just a week after Bessent disclosed that negotiations were underway between the United States and Argentina regarding a potential $20 billion financial assistance package.

Argentina\’s right-wing President, Javier Milei, who is known for his alignment with former US President Donald Trump, has been grappling with market instability since a significant loss in Buenos Aires provincial elections. These elections were viewed as a critical indicator for the upcoming mid-term elections. The results have raised concerns about Milei\’s ability to maintain economic stability and implement his reform agenda.

The announcement of the potential $20 billion support program by Bessent, which followed a meeting between Trump and Milei in New York, initially led to a recovery in the Argentine peso. However, the currency experienced a decline this week due to the lack of detailed information on the US rescue plan.

Bessent took steps to calm market anxieties on Thursday by sharing on social media that he had a \”very positive call\” with Argentina\’s Economy Minister Luis Caputo the previous day. He also mentioned that further discussions are scheduled to take place in Washington.

\”In the coming days I look forward to Minister Caputo\’s team coming to D.C. to meaningfully advance our discussions in-person regarding options for delivering financial support,\” Bessent wrote on X.

These reassurances helped stabilize the peso, which was trading at 1,450 to the dollar on Thursday, remaining unchanged from Wednesday. However, the currency has still dropped nearly 5 percent since the start of the week.

Milei, who assumed office in December 2023 with a promise to revitalize the economy by reducing the state\’s role, has made stabilizing the long-struggling peso a key focus of his campaign for the October 26 mid-term elections. A setback for his La Libertad Avanza party could limit his capacity to push through cost-cutting reforms in Congress.

Strategic Interest in the Western Hemisphere

Last week, Bessent mentioned that the Treasury Department was engaged in negotiations with Argentinian officials on \”a $20 billion swap line.\” The proposed package also includes the potential purchase of Argentine USD bonds and a credit line from the US Treasury. Details about the package, including the exact amount, remain unclear.

On Thursday, Bessent spoke to CNBC about the US strategic interest in the Western Hemisphere concerning Argentina. He noted that many governments in the region have shifted from far-left to center-right ideologies.

\”We did not support them, and then they took a hard lurch to the left,\” Bessent stated. \”And now, Argentina is a beacon down there, and there\’s a chance now for many other countries to come along — Bolivia, Ecuador, I think, Colombia — after the elections. So, what you don\’t want are these failed economic models.\”

Ongoing Discussions and Future Prospects

The ongoing discussions between the US and Argentina highlight the importance of economic stability in the region. The potential $20 billion support package aims to address the challenges faced by Argentina, particularly in stabilizing its currency and implementing necessary reforms.

As the situation evolves, the outcome of the mid-term elections in Argentina will play a crucial role in determining the future of these discussions. The success of Milei\’s economic policies and his ability to navigate political challenges will be closely watched by both domestic and international observers.

The US Treasury\’s commitment to supporting Argentina underscores the broader strategic interests in maintaining economic stability across the Western Hemisphere. As negotiations continue, the focus remains on finding viable solutions to address the economic challenges faced by Argentina and the region as a whole.