Argentine stocks surged Wednesday following news of a new U.S. aid package for President Javier Milei, even as President Donald Trump warned that American support could be withdrawn if Milei’s ruling coalition fails in upcoming midterm elections.
The announcement from U.S. Treasury Secretary Scott Bessent revealed that the new assistance would come from private banks and sovereign wealth funds, marking the second $20 billion facility in as many months. Combined with the previous September swap line, the total U.S. support for Argentina now stands at $40 billion, underscoring Washington’s commitment to stabilizing the struggling South American economy.
Market Reaction and Economic Context
Stocks on Argentina’s benchmark Merval index jumped nearly 10% on the news, reflecting optimism that the new package could ease financial pressures. The aid targets Argentina’s debt markets and aims to bolster confidence amid growing concerns over the country’s ability to meet upcoming debt obligations.
Despite the market cheer, Trump’s earlier warning that U.S. aid hinges on Milei’s political success triggered anger among economists and opposition politicians.
“Trump doesn’t want to save the country; he only wants to save Milei,” said centrist Senator Martin Lousteau, while economist Carlos Melconian labeled the remarks a “quasi-colonial incursion” into Argentina’s sovereignty.
Bessent attempted to clarify the administration’s position, stating that U.S. support is policy-specific, not election-specific. “As long as Argentina continues enacting good policy, they will have U.S. support,” he said, emphasizing that the focus is on Milei’s economic reforms rather than electoral outcomes.
Milei’s Economic Agenda and Challenges
Since taking office in December 2023, Milei has pursued aggressive austerity and deregulation measures designed to curb inflation and stimulate growth. Tens of thousands of public sector jobs were cut, consumer spending dropped, and vulnerable populations have struggled amid the sharp economic restructuring.
Milei has also faced mounting political resistance in Congress and a recent corruption scandal involving his sister, Karina Milei, which has weakened his support. Last month, his party suffered a significant defeat in Buenos Aires provincial elections, signaling a potential challenge ahead in the October 26 midterms.
Political analysts suggest Milei’s coalition may win only around one-third of contested seats, falling short of a majority.
U.S. Aid and Strategic Implications
The new aid package comes on the heels of Trump hosting Milei at the White House, reinforcing a close bilateral relationship built on ideological alignment and shared economic priorities. Bessent emphasized that the program is intended to stabilize Argentina’s currency and debt market, not directly influence electoral outcomes.
“It is not election-specific, it is policy-specific,” Bessent said. “So as long as Argentina continues enacting good policy, they will have U.S. support.”
Milei, meanwhile, remains steadfast in his reform agenda. In a CNBC interview, the 54-year-old president vowed to continue lowering taxes, deregulating the economy, and promoting growth throughout his term, despite domestic opposition and social unrest.
Political and Economic Implications
The dual impact of a new $40 billion U.S. aid package and Trump’s conditional support has created both optimism and controversy in Argentina. While markets welcome the short-term financial stability, critics fear overreliance on U.S. assistance could compromise sovereignty and deepen social inequality.
The midterm elections scheduled for October 26, 2025, will serve as a critical test for Milei’s political survival and the sustainability of his libertarian economic reforms. Analysts warn that the outcomes could determine not only Argentina’s domestic trajectory but also its future relationship with the United States.
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