Javier Milei eyes Trump friendship to win IMF loan for Argentina

Argentina’s libertarian president Javier Milei is hoping that budding friendships with US president-elect Donald Trump and billionaire Elon Musk will help secure much-needed investment in his crisis-stricken country, including a new loan from the IMF.

Argentina is already the IMF’s largest debtor, owing $44bn. It wants billions of dollars in fresh cash to help lift strict currency and capital controls that are slowing the country’s exit from recession.

One official in Milei’s government said there was “no question” that Trump’s victory would speed up talks with the fund, where the US is the largest stakeholder. His victory boosted a recent rally in Argentina’s bonds and stocks.

A senior international financial official was more cautious. “It may help Argentina” to secure an IMF deal, he said of Trump’s victory.

Milei, a libertarian economist, has offered himself as Trump’s strongest Latin American ally in a global culture war against the “woke” left, despite deep differences on trade with the protectionist Republican.

Milei endorsed Trump’s re-election bid backstage at the Conservative Political Action Conference in Maryland in February. In September, he called Trump one of the “world’s two most relevant politicians” — alongside himself.

He has also cultivated a high-profile friendship with Musk, the Tesla chief executive set to co-lead Trump’s new advisory “department of government efficiency”, and last week offered him advice on “replicating our chainsaw [model of spending cuts and deregulation]”.

Musk has exchanged warm words with Milei on social media and in person. Trump has also reciprocated, to a point. “Argentina went MAGA . . . Great guy . . . I love him, because he loves Trump,” Trump told CPAC in February.

Geographically distant and only a small US trading partner, Argentina is unlikely to be a priority for the president-elect. Milei waited almost a week for a call from Trump, behind dozens of other world leaders, before they spoke on Tuesday.

But analysts said Milei’s charm offensive may give him an opening.

“Trump’s victory is an enormous opportunity for Milei,” said Juan Cruz Díaz, managing director of Cefeidas, a political consultancy in Buenos Aires. “But the challenge is to translate being in sync into concrete advantages for Argentina, and for that, he needs to build a strong infrastructure to engage with Trump’s administration.”

Milei recently promoted his ambassador in Washington, businessman Gerardo Werthein, to foreign minister, and on Tuesday named as his replacement Alejandro Oxenford, a tech entrepreneur.

Milei will attend the CPAC rightwing conference in Mar-a-Lago on Thursday, hoping to meet Trump for a second time and Musk for a fourth. Musk has said his companies are “actively looking for ways to invest” in Argentina, with the country’s lithium production on the table, officials said.

Milei is not the only Latin American leader hoping to profit from Trump’s return. Nayib Bukele, El Salvador’s authoritarian president, has become a darling of the US right for his mass incarceration of gang suspects. Donald Trump Jr was an honoured guest at his reinauguration in June. 

Bukele said last week he had spoken with Trump on the phone, but El Salvador’s status as a major source of migration to the US makes the relationship problematic.

Trump has accused Bukele of cutting crime by “sending all of his criminals, his drug dealers, his people that are in jails” to the US. “He doesn’t do a wonderful job,” Trump said in July.

Bukele is also seeking an IMF deal but has been in a years-long stand-off with the fund over the country’s use of bitcoin as legal tender.

“Trump is going to be even more transactional and short-term in his [approach] to the region this time around, and the main transaction that matters obviously is reducing migration numbers,” said Will Freeman, a fellow at the Council on Foreign Relations in New York.

Trump’s plans for mass deportations are a huge problem for Bukele, with remittances from more than 1mn Salvadoreans and their families in the US accounting for more than 20 per cent of his country’s GDP. Many lack visas, and about 250,000 are in the US under a protected status that Trump could revoke.

Milei, too, could face economic pressures from Trump. Economists warn that the president-elect’s plans for deportations, high spending and tariffs could stimulate inflation, force up US interest rates and strengthen the dollar, complicating Milei’s goal of ending Argentina’s chronic price pressures and stabilising the peso.

But Trump has form for helping Argentina with the IMF. He was instrumental in securing the record $56bn loan that the fund granted Argentina in 2018 under president Mauricio Macri, a fellow wealthy businessman whom Trump first met four decades earlier when he did a New York real estate deal with Macri’s father.

That programme was derailed by a crisis of market confidence in Argentina’s government and was restructured into the current $44bn package in 2022. 

Despite praising Milei’s austerity, the IMF remains hesitant to increase its exposure. Staff are concerned about Milei’s refusal to significantly devalue the peso following its rapid appreciation this year, and a lack of clarity over his future monetary policy after a controversial campaign pledge to dollarise the economy.

Alejandro Werner, who ran the IMF’s western hemisphere department at the time of the 2018 Argentina bailout, said the US under Trump had “clearer incentives” to support Argentina at the fund. He warned that a new programme might need to wait until after Argentina’s midterm elections in late 2025 when Milei will have more political freedom.

“At that stage, the IMF, along with the Trump administration, could signal support by approving a new programme with net positive disbursements over the first 18 months,” he said.

Hector Torres, an Argentine former IMF executive director, said there was “a better chance of the US using its weight to override technical reservations in the fund with Trump in the White House”, though he added that he expected Argentina to get a deal anyway.

“We are mutual hostages: the largest debtor and largest creditor. We need each other,” he said.