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BUENOS AIRES, Argentina — Argentina’s libertarian leader is lavishing praise on President Trump ahead of his first White House visit on Tuesday. It’s a tactic that has helped transform President Javier Milei ’s cash-strapped country into one of the Trump administration’s closest allies.

The effusive declarations are nothing new for Milei — whose dramatic cuts to state spending and attacks on “woke leftists” have won him a following among U.S. conservatives.

“Your commitment to life, freedom and peace has restored hope to the world,” Milei wrote on social media Monday, congratulating the U.S. president on securing a ceasefire deal in Gaza, where a truce is holding after a devastating, two-year Israel-Hamas war.

“It is an honor to consider you not only an ally in the defense of those values, but also a dear friend and an example of leadership that inspires all those who believe in freedom,” he said.

The Trump-Milei bromance has already paid off for Argentina — most recently, to the tune of a $20 billion bailout.

Experts say Milei comes to the White House with two clear objectives. One is to negotiate U.S. tariff exemptions or reductions for Argentine products.

The other is to see how the United States will implement a $20 billion currency swap line to prop up Argentina’s peso and replenish its depleted foreign currency reserves ahead of crucial midterm elections later this month.

In a crisis, turning to Trump

The Trump administration made a highly unusual decision to intervene in Argentina’s currency market after Milei’s party suffered a landslide loss in a local election last month.

Along with setbacks in the opposition-dominated Congress, the party’s crushing defeat created a crisis of confidence as voters in Buenos Aires Province registered their frustration with rising unemployment, contracting economic activity and brewing corruption scandals.

Alarmed that this could herald the end of popular support for Milei’s free-market program, investors dumped Argentine bonds and sold off the peso.

Argentina’s Treasury began hemorrhaging precious dollar reserves at a feverish pace, trying shore up the currency and keep its exchange rate within the trading band set as part of the country’s recent $20 billion deal with the International Monetary Fund.

But as the peso continued to slide, Milei grew desperate.

He met with Trump on Sept. 23 while in New York City for the United Nations General Assembly. A flurry of back-slapping, hand-shaking and mutual flattery between the two quickly gave way to U.S. Treasury Secretary Scott Bessent publicly promising Argentina a lifeline of $20 billion.

Markets cheered, and investors breathed a sigh of relief.

Timing is everything

In the days that followed, Argentine Economy Minister Luis Caputo spent hours in meetings in Washington trying to seal the deal.

Reassurance came last Thursday, when Bessent announced that the U.S. would allow Argentina to exchange up to $20 billion worth of pesos for an equal sum in dollars. Saying that the success of Milei’s program was “of systemic importance,” Bessent added that the U.S. Treasury directly purchased an unspecified amount of pesos.

For the Trump administration, the timing was awkward as it struggles to manage the optics of bailing out a nine-time serial defaulter in the middle of a U.S. government shutdown that has led to mass layoffs.

But for Argentina, it came in the nick of time.

Aware of how a weak currency could threaten his flagship achievement of taming inflation and hurt his popularity, Milei hopes to stave off what many economists see as an inescapable currency devaluation until after the the Oct. 26 midterm elections.

A devaluation of the peso would likely fuel a resurgence in inflation.

“Milei is going to the U.S. in a moment of desperation now,” said Marcelo J. García, political analyst and Director for the Americas at the Horizon Engage political risk consultancy firm.

“He needs to recreate market expectations and show that his program can be sustainable,” García added. “The government is trying to win some time to make it to the midterms without major course corrections, like devaluing or floating the peso.”

No strings attached

Milei was vague when pressed for details on his talks with Trump, expected later on Tuesday. Officials say he would have a two-hour meeting with the U.S. president, followed by a working lunch with other top officials.

He was also expected to participate in a ceremony at the White House honoring Charlie Kirk, the prominent right-wing political activist who was fatally shot last month. Milei often crossed paths with Kirk on the speaking circuit of the ascendant global right.

“We don’t have a single-issue agenda, but rather a multi-issue agenda,” Milei told El Observador radio in Buenos Aires Monday. “Things that are already finalized will be announced, and things that still need to be finalized will remain pending.”

It’s not clear what strings, if any, the Trump administration has attached to the currency swap deal, which Democratic lawmakers and other critics have slammed as an example of Trump rewarding loyalists at the expense of American taxpayers.

There has been no word on how Argentina, the IMF’s largest debtor, will end up paying the U.S. back for this $20 billion, which comes on top of IMF’s own loan for the same amount in April. And that one came on top of an earlier IMF loan for $40 billion.

Despite all the help, Milei’s government already missed the IMF’s early targets for rebuilding currency reserves.

“The U.S. should be concerned that Argentina has had to return for $20 billion so quickly after getting $14 billion upfront from the IMF,” said Brad Setser, a former Treasury official now at the Council on Foreign Relations.

“I worry that this may prove to just be a short-term bridge and won’t leave Argentina better equipped” to tackle its problems, he added.

But in the radio interview before his flight, Milei was upbeat. He gushed about U.S. support saving Argentina from “the local franchise of 21st-century socialism” and waxed poetic about Argentina’s economic potential.

“There will be an avalanche of dollars,” Milei said. “We’ll have dollars pouring out of our ears.”

Debre writes for the Associated Press.

The International Monetary Fund has raised its global growth forecasts for 2025 and 2026 slightly, citing stronger-than-expected purchases in advance of an August 1 jump in tariffs imposed by the United States and a drop in the effective US tariff rate to 17.3 percent from 24.4 percent.

In its forecast on Tuesday, it warned, however, that the global economy faced major risks including a potential rebound in tariff rates, geopolitical tensions and larger fiscal deficits that could drive up interest rates and tighten global financial conditions.

“The world economy is still hurting, and it’s going to continue hurting with tariffs at that level, even though it’s not as bad as it could have been,” said Pierre-Olivier Gourinchas, IMF chief economist.

In an update to its World Economic Outlook from April, the IMF raised its global growth forecast by 0.2 percentage point to 3 percent for 2025 and by 0.1 percentage point to 3.1 percent for 2026. However, that is still below the 3.3 percent growth it had projected for both years in January and the pre-pandemic historical average of 3.7 percent.

It said global headline inflation was expected to fall to 4.2 percent in 2025 and 3.6 percent in 2026, but noted that inflation would likely remain above target in the US as tariffs passed through to consumers in the second half of the year.

The US effective tariff rate – measured by import duty revenue as a proportion of goods imports – has dropped since April, but remains far higher than its estimated level of 2.5 percent in early January. The corresponding tariff rate for the rest of the world is 3.5 percent, compared with 4.1 percent in April, the IMF said.

US President Donald Trump has upended global trade by imposing a universal tariff of 10 percent on nearly all countries since April and threatening even higher duties to kick in on Friday. Far higher tit-for-tat tariffs imposed by the US and China were put on hold until August 12, with talks in Stockholm this week potentially leading to a further extension.

The US has also announced steep duties ranging from 25 percent to 50 percent on automobiles, steel and other metals, with higher duties soon to be announced on pharmaceuticals, lumber, and semiconductor chips.

Such future tariff increases are not reflected in the IMF numbers, and could raise effective tariff rates further, creating bottlenecks and amplifying the effect of higher tariffs, the IMF said.

Shifting tariffs

Gourinchas said the IMF was evaluating new 15-percent tariff deals reached by the US with the European Union and Japan over the past week, which came too late to factor into the July forecast, but said the tariff rates were similar to the 17.3 percent rate underlying the IMF’s forecast.

“Right now, we are not seeing a major change compared to the effective tariff rate that the US is imposing on other countries,” he said, adding it was not yet clear if these agreements would last.

“We’ll have to see whether these deals are sticking, whether they’re unravelled, whether they’re followed by other changes in trade policy,” he said.

Staff simulations showed that global growth in 2025 would be roughly 0.2 percentage point lower if the maximum tariff rates announced in April and July were implemented, the IMF said.

The IMF said the global economy was proving resilient for now, but uncertainty remained high and current economic activity suggested “distortions from trade, rather than underlying robustness”.

Gourinchas said the 2025 outlook had been helped by what he called “a tremendous amount” of front-loading as businesses tried to get ahead of the tariffs, but he warned that the stockpiling boost would not last.

“That is going to fade away,” he said, adding, “That’s going to be a drag on economic activity in the second half of the year and into 2026. There is going to be pay back for that front loading, and that’s one of the risks we face.”

Tariffs were expected to remain high, he said, pointing to signs that US consumer prices were starting to edge higher.

“The underlying tariff is much higher than it was back in January, February. If that stays … that will weigh on growth going forward, contributing to a really lackluster global performance.”

One unusual factor has been a depreciation of the dollar, not seen during previous trade tensions, Gourinchas said, noting that the lower dollar was adding to the tariff shock for other countries, while also helping ease financial conditions.

US growth was expected to reach 1.9 percent in 2025, up 0.1 percentage point from April’s outlook, edging up to 2 percent in 2026. A new US tax cut and spending law was expected to increase the US fiscal deficit by 1.5 percentage points, with tariff revenues offsetting that by about half, the IMF said.

It lifted its forecast for the euro area by 0.2 percentage point to 1 percent in 2025, and left the 2026 forecast unchanged at 1.2 percent. The IMF said the upward revision reflected a historically large surge in Irish pharmaceutical exports to the US; without it, the revision would have been half as big.

China’s outlook got a bigger upgrade of 0.8 percentage point, reflecting stronger-than-expected activity in the first half of the year, and the significant reduction in US-China tariffs after Washington and Beijing declared a temporary truce.

The IMF increased its forecast for Chinese growth in 2026 by 0.2 percentage point to 4.2 percent.

Overall, growth is expected to reach 4.1 percent in emerging markets and developing economies in 2025, edging lower to 4 percent in 2026, it said.

The IMF revised its forecast for world trade up by 0.9 percentage point to 2.6 percent, but cut its forecast for 2026 by 0.6 percentage point to 1.9 percent.

The move gives US Treasury a chance to recommend replacement, at time that US President Donald Trump is reshaping global economy.

Gita Gopinath, the No. 2 official at the International Monetary Fund (IMF), will leave her post at the end of August to return to Harvard University, the IMF has said.

IMF Managing Director Kristalina Georgieva will name a successor to Gopinath in “due course”, the financial institution said in a statement on Monday.

Gopinath joined the fund in 2019 as chief economist, the first woman to serve in that role, and was promoted to first deputy managing director in January 2022.

No comment was immediately available from the United States Department of the Treasury, which manages the dominant US shareholding in the IMF. While European countries have traditionally chosen the IMF’s managing director, the US Treasury has traditionally recommended candidates for the first deputy managing director role.

Gopinath is an Indian-born US citizen.

The timing of the move caught some IMF insiders by surprise, and appears to have been initiated by Gopinath.

Gopinath, who had left Harvard to join the IMF, will return to the university as a professor of economics.

Her departure will offer the US Treasury a chance to recommend a successor at a time when President Donald Trump is seeking to restructure the global economy and end longstanding US trade deficits with high tariffs on imports from nearly all countries.

She will return to a university that has been in the Trump administration’s crosshairs after the school rejected demands to change its governance, hiring and admissions practices.

Georgieva said Gopinath joined the IMF as a highly respected academic and proved to be an “exceptional intellectual leader” during her time, which included the pandemic and global shocks caused by Russia’s invasion of Ukraine.

“Gita steered the Fund’s analytical and policy work with clarity, striving for the highest standards of rigorous analysis at a complex time of high uncertainty and rapidly changing global economic environment,” Georgieva said.

Gopinath has also overseen the fund’s multilateral surveillance and analytical work on fiscal and monetary policy, debt and international trade.

Gopinath said she was grateful for a “once in a lifetime opportunity” to work at the IMF, thanking both Georgieva and the previous IMF chief, Christine Lagarde, who appointed her as chief economist.

“I now return to my roots in academia, where I look forward to continuing to push the research frontier in international finance and macroeconomics to address global challenges, and to training the next generation of economists,” she said in a statement.

Published on 18/06/2025 – 18:37 GMT+2•Updated
18:43

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The conflict in the Middle East will further worsen the global economic outlook, already strained by ongoing trade disputes, the managing director of the International Monetary Fund (FMI) has told Euronews in an interview.

“Being hit by a trade war has consequences. We have projected a decline in global growth by half a percentage point,” Kristalina Georgieva said, adding: “What we witness now is more turbulence in the Middle East, which adds to uncertainty and therefore is bad for business.”

Since Donald Trump’s return to power as leader of the world’s largest economy, international trade has been disrupted by a wave of tariffs imposed by the US administration on its global partners.

Mexico and Canada were the initial targets, followed by a prolonged standoff between the US and China, which saw reciprocal tariffs between the pair soar to more than 100%.

On 2 April— a day he dubbed “Liberation Day”—Trump imposed tariffs on a wide range of countries, including the EU. He then declared a 90-day truce, set to expire on 9 July.

Negotiations are currently underway with the EU, which currently faces tariffs of 50% on steel and aluminum, 25% on cars, and 10% on all its exports to the US.

However, the director of the IMF, which is responsible for financial stability across the world and facilitate global trade, admitted that “the global economy has proven to be remarkably resilient to shocks, and that resilience continues.”

In her view, economic uncertainty is becoming the new normal.

“We live in a more shock-prone world, a world of higher uncertainty,” Georgieva said, adding: “For this world, countries need to work hard to be more resilient. Do reforms at home that would make your economies stronger.”

Georgieva, a former vice-president of the European Commission, also expressed optimism with the economic outlook despite the bleak growth figures.

She considered that the recent trade agreement between China and the US and the deal Trump has brokered with the UK to be good signs, saying: “We are in a better place.”

In an uncertain context, she also sees opportunities to be seized—an outlook shared by the European Commission, which is pursuing a strategy of diversifying its trading partners by expanding the number of trade agreements worldwide.

“In Europe, we see an increase in bilateral and plurilateral agreements, which I expect to be a big feature of the future of trade globally,” she told Euronews, adding that it is a great moment for Europe, “a defender of rules-based” global trade exchanges.