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President Milei lifts strict capital and currency controls to please US and global banks
Celebration is underway in Javier Milei’s «Pink House» as the IMF transfers $12 billion to Argentina — the first installment of a newly secured $20 billion financial «aid» package. Argentina already owes the Fund around $43 billion. This latest loan marks the 23rd bailout in the country’s long and turbulent financial history — yet another chapter in a familiar cycle.
Milei also announced a $12 billion loan program from the World Bank and a separate $10 billion deal with the Inter-American Development Bank. Together with a recently extended $5 billion currency swap with China, Argentina’s total debt to international institutions now exceeds $80 billion.
If repayments go according to plan, the IMF’s maximum loan to Argentina will reach 1,352% of the country’s quota by 2026 — making it the largest loan in IMF history in absolute terms.
«Today we are breaking the vicious cycle of disappointment and despair, and for the first time we are moving forward. We have permanently eliminated exchange controls in the Argentine economy», Milei declared, presenting it as Argentina’s version of «President Donald Trump’s Liberation Day» (a reference to the U.S. imposing tariffs on imports under Trump).
Trump is happy, Milei is happy — but Argentines are not. According to a recent poll by the news site elDiarioAR, more than 60% of Argentinians oppose the IMF agreement, and only 10% fully support it. People are trying to understand what this largesse from the global banks means for them — and how the government will repay the debt.
Former Economy Minister Martín Guzmán warned that the risk of the new IMF agreement is that the funds will only be used to «put out fires», such as the falling peso, ultimately increasing the debt burden. This could allow international companies to withdraw some $9 billion from the country, weakening the peso and pushing inflation even higher.
Milei lifted the $200 monthly cap on U.S. dollar withdrawals, eliminated the 30 percent tax, and removed other restrictions, allowing Argentines with bank accounts to buy dollars freely for the first time since 2019.
The new policy also includes the removal of the peso’s peg to the U.S. dollar. But instead of letting it float freely, the government is allowing it to trade within a «currency corridor» between 1,000 and 1,400 pesos per dollar. As of April 11, the rate was 1,375 pesos to the dollar, compared to the official rate of 1,097.
By eliminating subsidies, lifting price controls, firing tens of thousands of civil servants, and limiting the central bank’s reliance on printing pesos to cover government spending, Milei achieved Argentina’s first budget surplus in nearly two decades. These steps helped stabilize macroeconomic imbalances and pleased the markets, but at a high cost to the population.
But despite all these changes and financial hardships, analysts say there’s little sign of a sustainable economic recovery — and there probably won’t be. This is a «trap» set by Milei and his Washington backers to reduce inflation before the crucial mid-term elections in October, which will be crucial to expanding his party’s limited representation in Congress and winning public confidence.
After signing the IMF agreement, the government faced what it publicly denied: another currency devaluation.
«The government admits that not everything is going according to plan. Despite all the sacrifices, inflation is rising. The devaluation will soon lead to an even greater loss of wage purchasing power, and it remains unclear where the dollars to pay off the debt will come from — or what kind of national model we even have», wrote Pagina 12.
Between 2024 and 2028, Argentina will pay $4.9 billion in IMF surcharges. On average, these surcharges account for 28% of the non-principal payments that debtor countries typically make to the IMF within five years of receiving loans.
The White House, aware of Argentina’s risks and potential default, continues to support Milei’s economic program in order to maintain a strategic ally in the region under the Monroe Doctrine.
On April 14, just three days after the IMF mission left Argentina, U.S. Treasury Secretary Scott Bessent landed in Buenos Aires. His unexpected visit raised eyebrows.
According to Argentine sociologist Atilio Borón, it is highly unusual for a Treasury secretary to visit a country that is not vital to the global economy — except to attend multilateral forums. The visit, he says, was more political than financial.
There were expectations that Bessent would come to arrange special financing from the U.S. Treasury, as the White House has done in other countries. But that didn’t happen. This was a political mission, not an economic one.
According to Borón, there are several possible reasons. First, China: a country that Milei initially criticized but is now borrowing from. Bessent reportedly repeated Trump’s three magic words: «Keep China out».
Second, Bessent assessed on the ground the possibility of dollarizing Argentina’s economy — a move in line with the recent global decline in the dollar’s influence. With Trump looking for regional allies, linking Argentina to the US dollar would be a geopolitical win. The dollar is already legal tender in Ecuador, El Salvador and Panama. Adding Argentina — the third largest economy in the region — would be a major win for Washington.
A third motive may be military. Given Argentina’s geostrategic location — near Antarctica and sharing the key «triple border» with Brazil and Paraguay — such plans seem realistic.
Notably, in exchange for financial assistance, Bessent demanded U.S. military bases throughout Argentina, including in Patagonia and the Tierra del Fuego archipelago, to control access to Antarctica and bio-oceanic routes — ignoring Britain’s obsolete Falklands base.
But why was it Bessent who flew to Buenos Aires and not Secretary of State Rubio or Secretary of Defense Hegseth?
Bessent is openly gay and a former associate of billionaire George Soros — he worked at Soros Fund Management, founded by the generous donor to the Democratic Party, which Trump openly despises. It seems that Trump sent his «own man» to Argentina’s libertarians — business is business.
And Bessent was warmly received. «Simply put, Milei’s government will do everything it can to give away Argentina’s wealth», predicted Pagina 12.
«We want our alliance with the United States to be a beacon for Latin America», President Milei declared. But that «beacon», many fear, could lead Argentina straight into the shoals, rocks, and reefs.