The U.S. administration of Donald Trump announced this Wednesday that it is ready to buy Argentine debt and provide financing to its ultra-liberal ally, Javier Milei, who is in trouble just over a month before the midterm elections in Argentina.
The U.S. Treasury announced it is finalizing a $20 billion swap line with the Argentine Central Bank to assist the Argentine president, whose political situation is in crisis less than a month before crucial legislative elections.
A swap line is formally a currency exchange between central banks, but in the case of the United States with Argentina, a country under severe market pressure, it is a temporary, readily accessible line of dollar financing that Washington grants to prevent the peso from falling.
Primary debt is debt issued by the government to raise money immediately, through bonds or bills, while secondary debt is debt that has already been issued and is exchanged by investors, whether public or private.
This Wednesday, U.S. Treasury Secretary Scott Bessent told Fox News that they will not allow “an imbalance in the markets to cause a rollback of their substantial economic reforms.”
Argentine Economy Minister Luis Caputo welcomed the announcement: “Thank you, Secretary Scott Bessent (…) Argentines, a new era begins.”
President Donald Trump said Tuesday that the United States will help Argentina, but stressed that he does not believe a financial bailout is necessary.
Trump spoke alongside Argentine President Javier Milei before the two met on the sidelines of the UN General Assembly, a day after Treasury Secretary Scott Bessent said all options were on the table to stabilize the South American country.
“We’re going to help them. I don’t think they need a bailout,” Trump told reporters in New York.
“Javier Milei is a very good friend, a fighter, and a WINNER, and he has my complete and total support for his reelection as President,” Trump added on his Truth Social network.
The Treasury Secretary emphasized that the U.S. president doesn’t have the same level of confidence in all international leaders.
“President Trump has given President Milei a rare endorsement for a foreign official, to demonstrate his confidence in his administration’s economic plans,” Bessent said.
Following the US government’s support, Milei praised Trump in her speech at the United Nations General Assembly on Wednesday. He has made “difficult decisions” to avoid a “global catastrophe,” she said.
Argentina is experiencing a difficult economic situation due to the government’s electoral and political setbacks in Congress, which have put Milei on the ropes.
The run on the peso forced Milei’s government last week to sell the country’s dwindling reserves to keep the dollar within the floating exchange rate band.
The swap “doesn’t solve the problems, but it does relieve the pressure, the urgency of the coming days,” economist Martín Kalos, director of EPyCA Consultores, told AFP, and allows “time to correct prob
Although he warned that “we have to see what the political and financial conditions are” that the loan entails.
The United States “didn’t ask for anything in return, and we, of course, said what everyone already knows, that for us they are a strategic ally,” Caputo said.
President Donald Trump often supports leaders of other countries with whom he shares a political affinity, even if there is no direct benefit to his agenda.
In Latin America, Trump has shown greater affinity with far-right leaders. Washington has been pressuring the Brazilian government for several weeks to support former President Jair Bolsonaro, who was convicted of a coup.
In August, Trump imposed a 50% tariff on imports of many Brazilian products to combat what he called a “witch hunt” against Bolsonaro, who was sentenced to 27 years in prison for trying to seize power after losing the 2022 election.
In addition to the tariffs, the United States imposed consular and financial sanctions on Supreme Court justices who convicted Bolsonaro and other officials.
Under house arrest since August, the former Brazilian president (2019-2022) is waiting for the court to rule on any appeals from his defense so that the sentence can be enforced.
Furthermore, his government also has a close relationship with Nayib Bukele, the president of El Salvador, who agreed to imprison migrants expelled from the United States in a high-security prison, even though they are not Salvadoran.
Milei’s resounding defeat in the Buenos Aires province legislative elections earlier this month, coupled with a corruption scandal involving her sister and presidential secretary, Karina Milei, led to weeks of economic and political turmoil in Argentina.
A bribery scandal that came to light in August involving accusations against Karina Milei struck a chord with voters, who consider corruption the most important issue in this election, ahead of unemployment and inflation.
Milei stated on Friday that the “political panic” unleashed a storm in the markets, sinking the peso and driving up country risk, less than a month before the October legislative elections.
There is “a political panic that is spiraling into the market and generating enormous disorganization in terms of country risk,” the president said in a speech this Friday before the Córdoba Stock Exchange.
The president defended his economic program and said he is being “threw the brakes” to harm him. The radical right-wing president is banking on a victory in the October midterm elections to improve his representation in Congress and gain support for his project.
On September 7, the ruling party lost the legislative elections in the province of Buenos Aires, the most populous in Argentina, where the opposition Peronist party won.
The ultra-liberal president’s La Libertad Avanza party won 33.7% of the vote, nearly 14 points behind the opposition Peronist party, Fuerza Patria, which won with 47.2%.
The national legislature, where the government is in the minority, overturned a presidential veto of a law that provided more funding for people with disabilities, in defiance of Milei’s austerity policy.
Last week, Congress approved in one of its chambers the rejection of three other vetoes of laws that provide more funding to universities and pediatric hospitals and authorize the automatic transfer of funds to the provinces.
A few days earlier, Milei said that “the worst is over” and announced that in 2026 he will increase spending on pensions, health, education, and disability, the sectors most affected by the ultra-liberal government’s draconian fiscal adjustments.
However, Milei’s approval ratings are at their lowest level. According to the LatAm Pulse survey conducted by Atlas Intel for Bloomberg, 53.7% of Argentines disapprove of her performance, the lowest level since she came to power in December 2023.
The same poll indicates that La Libertad Avanza will win the October elections, with 39.8% of the vote, but its lead over the main Peronist opposition party has been cut in half since July.
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