New York (AFP) – US President Donald Trump promised financial “help” for struggling Argentina in a meeting with close ally Javier Milei, who is seeking a US loan to calm markets ahead of crucial mid-term elections. “We’re gonna help them but I don’t think they need a bailout. He’s doing a fantastic job,” Trump said during a meeting with the right-wing president on the sidelines of the UN General Assembly in New York.
Budget-slashing libertarian Milei has sought to halt on the peso following a provincial election trouncing for his party that was seen as a litmus test for next month’s national mid-terms. Trump said he was giving Milei his “full endorsement.” “He, like us, inherited a mess and what he’s done to fix it is good.… We need to make Argentina great again,” Trump told reporters, echoing his own “Make America Great Again” slogan. On his Truth Social account, the US president further praised Milei as a “WINNER” and said he would support his “Re-Election as President.”
Responding on X, Milei thanked Trump for his “great friendship and this extraordinary gesture.” Milei’s stinging defeat in Buenos Aires provincial polls on September 7 spooked investors, who fear that a similar drubbing in October’s legislative vote could hamper his reform agenda. The perennially ailing peso lost 4.48 percent against the dollar last week, despite the Central Bank selling $432 million in reserves to try to shore up the currency.
On Tuesday, markets reacted positively to Trump’s show of support. Argentina’s sovereign risk, a measure of market confidence in a state’s solvency, fell to 960 basis points after soaring above 1,400 last week, and the peso strengthened by 3.15 percent. On Monday, the US Treasury said it stood ready to “do what is needed” to help stabilize markets in the South American country. Treasury Secretary Scott Bessent said “all options” were being considered, including currency swap lines, direct currency purchases, or government debt acquisitions.
Bessent attended Tuesday’s meeting between Trump and Milei, as did Argentina’s Economy Minister Luis Caputo. Speaking to reporters afterwards, Caputo said that the two countries had discussed a “specific figure” for US assistance, which he did not want to disclose “until it has been finalized.” He said that the United States “did not ask for anything in return.” The White House said there would be further announcements about Argentina’s financial situation after the meeting.
Free-marketeer Milei’s election was cheered by investors in 2023, but he has begun to hemorrhage support after two years of biting austerity and a corruption scandal involving his sister. The World Bank, which unveiled a $12 billion support package for Argentina in April, announced that it was “accelerating” its support, with up to $4 billion “over the coming months” to support his reforms. Argentina, which has a track record of economic crises and hyperinflation, is the International Monetary Fund’s biggest debtor.
© 2024 AFP
