Even before Argentina’s previous agreement with the International Monetary Fund expired in December, President Javier Milei began pursuing a new bailout package.
Last month, Milei flew to Mar-a-Lago to meet Donald Trump, hoping the US president would help him secure fresh funds. A week later, the IMF’s executive board greenlit a loan of $20 billion.
The same day, Milei addressed the nation on television: “Today, we are breaking the cycle of disillusionment and disenchantment and beginning to move forward for the first time.”
Since its first rescue package in 1958, Argentina has been the recipient of more IMF programs than any other country: a record 23 deals amounting to $177 billion in loans. However, due to the conditions of the loans themselves, inconsistent policies, chronic inflationary pressures, and a lack of meaningful structural reforms, they did little to boost the economy.
This time things might be different. Milei’s aggressive measures last year led to a rare fiscal surplus, reduced inflation, and bolstered growth and employment. The new loan may help Argentina further kickstart its economy.
Then there is Trump.
Milei’s deference to the US president has often been ridiculed, notes Juan Pablo Ferrero, senior lecturer in the Department of Politics, Languages, and International Studies at the University of Bath in the UK: “He has been a strong supporter of Trump even before the presidential elections. Many were skeptical that he would be reciprocated, especially given their different economic belief systems, but the gamble went his way.”
Milei’s unconditional alignment with the US, Ferrero says, has yielded tremendous benefits: “The deal with the IMF and a recent statement from the US government that the Treasury could grant a loan in the event of an external shock show an extraordinary level of support for Milei.”
All of the above, Ferrero argues, has allowed Milei to lift some capital controls and provide a sense of stabilization to the economy.
Still, the tale of the two presidents differs when it comes to tariffs. While Trump has raised them, the libertarian Milei has rolled them back, igniting an unprecedented import boom and attracting investments. However, the peso has strengthened, making Argentina very expensive and hitting the middle class the hardest, Ferrero adds.
“Mid-term elections are approaching later this year,” he notes. “Milei hopes the discreet charm of normality will do its work and persuade voters.”