Argentina’s President Javier Milei has revealed that the country is in very advanced negotiations with the United States over a loan, as the Central Bank hemorrhages reserves in an effort to contain a run on the peso ahead of mid-term elections.
Speaking to the Cordoba-based newspaper La Voz del Interior, Milei said the government had anticipated that 2026 would be financially difficult and had begun developing strategies to cover looming payments, including 4 billion dollars in January and 4.5 billion dollars in July. Those negotiations take time, but we are working really hard, we are very advanced, and it is a matter of time, he said.
Reserves Under Pressure
Milei’s comments came during a week in which Argentina’s Central Bank sold more than 1 billion dollars to support the value of the peso as political uncertainty grew ahead of the mid-term elections. Economy Minister Luis Caputo said he was willing to sell down to the last dollar to defend the currency, prompting speculation that the government was expecting an injection of foreign cash.
The peso is subject to a banded exchange rate scheme under which the monetary authority can only intervene if the currency strengthens or weakens beyond set thresholds. The system was agreed as part of Argentina’s 20 billion dollar deal with the International Monetary Fund, announced in April.
The IMF has urged Argentina to accelerate reserve accumulation during what it called a window of opportunity, warning that the country’s foreign exchange reserves remain perilously low even after the new bailout package. Caputo responded by pledging to accumulate more reserves than anyone might think.
Washington Signals Willingness
Milei’s remarks were not the first hint that the Trump administration would be willing to support Argentina. In April, US Treasury Secretary Scott Bessent visited Buenos Aires and met Milei. After initially telling Bloomberg that a special credit line was not under consideration, Bessent said a week later that the US would offer the country a credit line if a global shock were to put its economic recovery at risk.
Any such loan would likely flow through the Exchange Stabilization Fund, a US emergency reserve fund dating to the 1930s that is often used to help foreign governments and central banks stabilize their currencies. Milei’s comments had not been confirmed by US officials at the time of reporting, according to the Buenos Aires Herald.
The stakes are high for Milei, whose political fortunes are tied to maintaining the peso’s stability while building reserves ahead of the October elections. Dollar deposits in Argentine banks have climbed to roughly 40 billion dollars, up from about 14 billion when Milei took office, reflecting both growing confidence and persistent dollarization tendencies in the economy.
Sources: Buenos Aires Herald; La Voz del Interior; Financial Times; IMF
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