IMF chief offers Argentina show of support

The head of the International Monetary Fund offered a fresh voice of support for Argentina Friday, backing Trump administration efforts to shore up President Javier Milei before Argentina’s midterm elections later this month.

IMF Managing Director Kristalina Georgieva said she spoke with US Treasury Secretary Scott Bessent about “extensive US plans for financial assistance, including the use of US holdings of” Special Drawing Rights for Argentina. SDRs, as they are known, are the Washington-based fund’s reserve asset, based on a basket of currencies.

Georgieva’s comments were the latest twist in a stomach-churning month in Argentine markets, with bonds repeatedly rising and falling over concerns about the prospects for Milei’s government and his economic reform programme. US President Donald Trump has moved to rescue Milei financially after his ally suffered a landslide loss in a provincial election, and is set to host Milei at the White House on October 14.

After Georgieva’s comment, in an X post, Argentine dollar bonds extended gains across the curve with notes maturing in 2035 hitting a high for the day, advancing two cents on the dollar to trade above 55 cents, according to data compiled by Bloomberg. The peso had already closed trading and finished down more than six percent this week, the worst in emerging markets despite Milei’s government trying to prop up its currency – widely seen as overvalued – by selling dollars.

Neither Georgieva nor Bessent has spelled out the mechanism of support for Argentina, nor its timeline. The US Treasury didn’t immediately respond to a request for comment on the IMF chief’s social media post.

Argentine Economy Minister Luis Caputo is heading to Washington Friday to continue talks with Bessent, who has previously indicated the potential for a US$20-billion currency swap line between the two nations – something that’s drawn ire from some Republicans on Capitol Hill.

The swap would come on top of the IMF’s own loan to Argentina in April for the same amount, something Bessent called a “fulcrum day” at the time for the South American nation.

In total, Argentina owes the IMF about US$55 billion over multiple programmes since 2018 as repeated bailouts have failed to stabilise the nation’s economy. If the US chooses to loan its SDRs at the IMF to Argentina, Milei could exchange them for dollars or perhaps pay down some of the principal his government owes to the Washington-based lender.

Efforts to stabilise Milei’s government come before crucial October 26 midterm elections where nearly half the seats in Argentina’s Congress are on the ballot. Once optimistic investor expectations that Milei would cruise to victory have been dashed in recent months by a stagnating economic recovery, corruption scandal and resurgent leftist opposition that crushed his party a few weeks ago in Buenos Aires Province elections – seen by many as a bellwether for the national vote.

What’s also unclear is Argentina’s commitments in exchange for the financial lifeline from Trump. Milei has denied that the US has asked Argentina to get rid of its current US$18-billion swap line with China. Caputo has insisted no policy changes are coming after the midterm election despite analysts speculating about a need to fully lift currency controls and let the peso float without intervention.