On Wednesday, U.S. Treasury Secretary Scott Bessent confirmed the U.S. is in talks to provide $20 billion to Milei. The announcement comes months after the Trump administration dismantled the U.S. Agency for International Development (USAID) in an effort to instead support programs aligned with Trump’s “America First” agenda.
Argentina is one of the biggest South American economies, and has notable natural resources, including oil, gas, uranium and lithium, which are often used in batteries.
The core problem is that Argentina has been overspending and oversubsidizing for decades. Milei’s solution here is to cut spending and jack up interest rates to crush the crippling inflation that’s a direct result of all of the money printing, which also wrecks the economy. It’s a painful process, but inflation is much lower. In fact, the black market value of the peso vs the official rate has been quite a bit different for years, and this recent collapse of the peso seems to be part of a re-alignment of those prices.
You can’t really fix decades of mismanagement with a couple years of correction, it’s going to take some years yet. Unemployment is something like 8%, and the fed benchmark rate is still >30%, way down from where it was but still quite high. What Milei should be doing is attacking the core problems, such as making the fed completely independent so the next admin can’t just print their way to popularity. Fixing this problem will take a few years yet, with some more pain in the short-term as interest rates remain.
An infusion of cash isn’t really what they need IMO. What they need is to get business going again. This cash infusion is nothing more than a political move to try to rescue Milei’s popularity and provide short-term relief. It’s not going to actually fix anything. If the US is going to offer anything, it should offer trade deals.