Trump props up Milei's economy with $20 billion
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The package is part of President Donald Trump’s broader strategy to support the embattled government of Argentine President Javier Milei.
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Argentina's President Javier Milei arrives at Ezeiza Prison Complex to present a draft reform of the criminal code to be sent to the Congress in Ezeiza, Argentina, Thursday, October 2, 2025. (AP Photo/Rodrigo Abd)
In a bold maneuver, the US Treasury finalized a $20 billion currency swap agreement with Argentina, including direct peso purchases in international markets. This intervention, announced by Treasury Secretary Scott Bessent, marks a significant step by Washington to stabilize a foreign currency suffering from deepening economic volatility.
"The US Treasury is prepared, immediately, to take whatever exceptional measures are warranted to provide stability to markets," Bessent stated on X. The move immediately lifted Argentine markets, where the 2035 bond rose 4.5 cents, the peso gained 0.8% against the dollar, and local stocks surged by 5.3%.
The @USTreasury has concluded 4 days of intensive meetings with Minister @LuisCaputoAR and his team in DC. We discussed Argentina’s strong economic fundamentals, including structural changes already underway that will generate significant dollar-denominated exports and foreign…
— Treasury Secretary Scott Bessent (@SecScottBessent) October 9, 2025
The package is part of President Donald Trump’s broader strategy to support the embattled government of Argentine President Javier Milei. It also aligns with the International Monetary Fund's (IMF) existing $20 billion loan program with Argentina.
The rescue underscores the close ideological alliance between Trump and Milei, often dubbed the "Trump of the Pampas" for his libertarian agenda. Milei has promised to reduce Chinese influence in Argentina and expand access to US firms in strategic sectors like rare earths and uranium.
Bessent emphasized that this was not a bailout in the traditional sense. "No money was transferred to Buenos Aires," he stated, clarifying that the funds came from the US Exchange Stabilization Fund, which he noted has never incurred a loss.
Milei’s economic reforms
Since assuming office in late 2023, Milei has implemented aggressive austerity measures aimed at curbing inflation and reducing public spending. These so-called "chainsaw reforms" slashed government expenditures by 30% and brought Argentina's first budget surplus in 14 years.
Inflation has significantly dropped, from nearly 300% annually to approximately 36-43% in 2025, with monthly inflation falling below 2%. The GDP rebounded by 6.3% year-on-year in Q2 2025, and investment jumped by 32%.
However, the economic tightening came at a social cost. Poverty surged to 55% in early 2024 before receding to 31.6% by mid-2025. Real wages declined, particularly in the public sector, and unemployment initially spiked before gradually improving.
Political setbacks, market instability
Despite economic improvements, Milei’s political capital has been eroded. His party suffered a major defeat in the Buenos Aires provincial elections, winning only 34% of the vote against the Peronists' 47%. The loss in Argentina's largest province dealt a severe blow ahead of the October 26 midterms.
Corruption scandals involving Milei's sister, Karina Milei, and close allies further dented his anti-corruption image. Revelations of an $800,000 monthly kickback scheme tied to the disability agency ignited public outrage and further shook investor confidence.
Financial markets reacted swiftly, with the peso falling nearly 10% post-election, reserves were drained in defense of the currency, and interest rates soared above 80%.
US aid as a political and geopolitical tool
The timing of the US intervention is no coincidence. It offers Milei a critical buffer ahead of midterms, where his La Libertad Avanza party seeks to expand its legislative influence.
Trump administration officials argue that the move supports stability in the Western Hemisphere by reinforcing a free-market government in the region, with Bessent insisting that Milei’s success has "systemic importance" for US interests.
However, the bailout drew sharp criticism from Democratic lawmakers. Senator Elizabeth Warren condemned the aid, stating, "It is inexplicable that President Trump is propping up a foreign government, while he shuts down our own."
