MercoPress. South Atlantic News Agency

Milei: bailout from Washington being negotiated

The last time the US Treasury's Exchange Stabilization Funds were touched was in 1995 to bail Mexico out of the “Tequila Crisis”

Argentine President Javier Milei confirmed on Friday that his government was in “very advanced” negotiations with the US for an emergency loan from the Treasury's Exchange Stabilization Fund. If secured, the bailout would be used to cover more than US$8.5 billion in debt maturities due in January and July of 2026.

Back in April, US Treasury Secretary Scott Bessent said during his trip to Buenos Aires that “if Argentina needs it, in the event of an external shock and if Milei stays the course, we would be willing to use the FSE,” he said at the time. The closest precedent for this tool dates back to 1995, when the United States granted Mexico a US$20 billion loan to deal with the “tequila” crisis.

“We have been working on this. These negotiations take time, but until it is confirmed, we will not make any announcements. But yes, we are working very hard, we are very advanced, and it is a matter of time,” Milei stressed.

The government “already knew that this year was going to be very difficult,” Milei also admitted. Hence, “we had already begun to develop strategies to cover Argentina's payments,” he further explained.

Milei's announcement came as the country is facing rising financial volatility, with the peso falling daily against the US dollar and the Central Bank (BCRA) selling greenbacks on the market to avoid a spike.

Argentina's risk index has surged to 1,456 points, making it the second-highest in Latin America.

The official dollar has exceeded AR$1,500, with the BCRA selling over US$1.1 billion in reserves in just three trading sessions to defend the currency's exchange rate band. The US$678 million intervention on Friday alone was one of the largest in two decades.

Economy Minister Luis Toto Caputo has dismissed the market's concerns, stating that the economic program was “solid.” However, the increasing country risk reflects investor fears about Argentina's ability to sustain its fiscal plan.

According to the Argentine opposition, recent disbursements from the IMF have vanished in attempts to contain the dollar, as well as in acts of corruption, masked under the so-called “chainsaw” spending cuts.

Despite his waning aura, Milei said Friday in Córdoba that he hoped “Society is going to paint the country purple” in the Oct. 26 midterm elections, in reference to the color representing his La Libertad Avanza (LLA) party, which has already suffered a significant defeat in the province of Buenos Aires.