TL;DR: The US plans a $20 billion currency swap line and potential bond purchases to support Argentina’s President Javier Milei amid economic turmoil and upcoming elections. The aid aims to stabilize Argentina’s currency, boost investor confidence, and counter China’s influence in the region. The move has sparked political criticism domestically and regionally.
The US Treasury, led by Scott Bessent, is negotiating a $20 billion currency swap line and stands ready to buy Argentine foreign bonds to support President Javier Milei’s government ahead of the October 26 midterm elections.
- Bessent described the aid as a “bridge to the election,” aiming to help Milei regain investor confidence and stabilize the peso amid capital flight after recent election losses.
- Argentina’s central bank cut its peso repo rate by 10 percentage points to 25% following the announcement, helping stabilize the currency and boosting Argentine bonds and stocks.
- The US support is the largest direct intervention in Argentina’s financial markets by the US, surpassing its currency swap line with China ($18 billion), signaling a geopolitical challenge to Beijing’s influence.
- Critics, including Senator Elizabeth Warren and Peronist leaders, called the aid a politically motivated bailout ahead of the election, while economists warn about risks of repeating Argentina’s historical debt and default cycles.
- Milei hailed the US support as validation of his economic reforms, promising to use the funds to rebuild depleted reserves and forecasted a “landslide” election victory for his party.
- The move contrasts with broader US foreign policy under Trump, who cut aid elsewhere but is backing Milei due to ideological alignment and regional strategic interests.