The U.S. Treasury approved for Argentina a $20 billion currency swap, and President Donald Trump announced that the United States would purchase Argentine beef as a way to lower meat prices domestically. File Photo by Cezaro de Luca/EPA
BUENOS AIRES, Oct. 23 (UPI) — In Argentina, the words of U.S. President Donald Trump still echo.
“They are fighting for their life, they don’t have money, they are fighting with all their might to survive,” Trump told reporters traveling with him aboard Air Force One between Florida and Washington on Monday.
His remarks came in the context of the financial support that the U.S. Treasury approved this week for Argentina — a $20 billion currency swap — and the announcement that the United States would purchase Argentine beef as a way to lower meat prices domestically.
Trump’s statements surprised many in the South American country, including several Argentine economists.
“His words show a lack of understanding of Argentina’s economy. We’ve been in an economic crisis for a long time. Argentina isn’t a developed country, but it’s not a poor one, either,” Guido Zack, director of economics at the Fundar think tank, told UPI.
Zack added that Argentina faces a serious political crisis and deep social divisions that hinder agreement on economic policy. This stagnation, Zack said, has worsened economic, productive and social indicators, but the reality is far from the catastrophe Trump described.
“It’s not a country without food, without money or one that is starving,” he said.
Trump’s comments are nonsense, said Gustavo Ludmer, an economist at the University of San Andrés. He “isn’t well informed about what’s happening in Argentina. He supports [President Javier] Milei, but doesn’t understand why he wants to keep the dollar cheaper,” said Gustavo Ludmer, an economist at the University of San Andrés.
Alejandro Rodríguez, a researcher at the Center for Macroeconomic Studies of Argentina, called Trump’s remarks exaggerated.
“Things in Argentina aren’t good, but there’s a big difference between that and saying we’re dying,” Rodriguez said.
The U.S. Treasury’s assistance aims to prevent the collapse of Argentina’s economy, which is struggling with a shortage of U.S. dollars and persistent instability. The swap is intended to inject liquidity into the country’s central bank.
There are political and strategic motives behind the decision, said Gustavo Ludmer. “Milei is a strategic ally of Trump. It is a far-right government completely aligned with Trump’s geopolitical interests,” he said.
Meanwhile, the Argentine president has a plan to curb inflation built on two main pillars.
The first is achieving a fiscal surplus, which Milei accomplished by cutting public spending. The second is keeping the dollar under control — and that’s where the problem lies.
With congressional elections scheduled for Oct. 26, Milei’s government needs to keep the dollar and inflation under control, Ludmer said.
Rodríguez agreed. “Milei’s government is not in its best political moment. And uncertainty over the election outcome is leading investors to shift their portfolios to dollars as protection against a possible return of populism.”
That has put downward pressure on the peso and sparked fears that inflation could surge.
In Argentina, fear of inflation runs deep because it has shaped the country’s economic life for decades, eroding purchasing power, savings and confidence in the currency.
Since the 1970s, Argentines have endured repeated cycles of hyperinflation, currency devaluations and price freezes that destroyed wealth and distorted the economy.
That collective experience created a culture of distrust toward the Argentine peso. People tend to seek refuge in the U.S. dollar, constantly adjust prices and anticipate increases even before they happen.
“For electoral reasons, Milei’s government decided to set an unsustainably low exchange rate,” Zack said. The strategy follows a clear political logic: a cheap dollar helps curb inflation in the short term and creates the impression of economic stability.
The problem is that the tactic carries a steep cost. When the exchange rate is low, Argentines take advantage by buying more dollars, traveling abroad or importing goods. That quickly drains the Central Bank’s reserves.
Ernesto Mattos, director of the Institute for Development, Production and Innovation Studies at José C. Paz University, was more specific about the figures.
“Since Milei lifted the cap on how many dollars Argentines can buy, about $17 billion have left the Central Bank’s reserves in just a few months,” he said.
The strong demand for dollars forced the government to seek additional funds, Mattos said.
“Without the U.S. Treasury’s dollars, the peso would depreciate sharply, inflation would soar and Milei’s economic plan would collapse just before the legislative elections,” he said.
However, this financing does not solve the underlying problem, Zack said, because each new loan increases Argentina’s foreign debt. And the larger that debt grows, the harsher the adjustment will be when the country eventually has to pay it back.
