In an extraordinary turn of events, the United States has stepped in to shore up Argentina’s embattled economy, offering a $20 billion swap line and other financial support to President Javier Milei as he faces mounting economic and political challenges ahead of the country’s pivotal midterm elections. The move, announced by U.S. Treasury Secretary Scott Bessent on September 24, 2025, signals a dramatic shift in American foreign policy toward Latin America, one that rewards ideological allies and punishes critics, according to multiple sources including The Wall Street Journal and The New York Times.
The financial lifeline comes at a crucial moment for Milei, who, after 20 months of radical free-market reforms, has seen both his popularity and Argentina’s economic stability tested to their limits. Once hailed for taming runaway inflation and slashing Argentina’s bloated budget, Milei has recently watched investors panic-sell the peso and dump Argentine assets, raising fears of yet another sovereign default. The U.S. Treasury’s readiness to offer a $20 billion swap line—effectively supplying dollars that Argentina could use to stabilize its currency—was part of a suite of measures outlined by Bessent, including buying Argentine dollar bonds and providing credit via the Treasury’s exchange stabilization fund.
“We are working in close coordination with the Argentine government to prevent excessive volatility,” Bessent said, just a day after President Trump publicly praised Milei at the United Nations General Assembly. “As President Trump has stated, we stand ready to do what is needed to support Argentina and the Argentine people.” According to The Wall Street Journal, the peso immediately strengthened more than 2% against the dollar, and the Merval stock index rose 1.5% following the announcement.
Milei, a self-proclaimed radical libertarian, was elected in 2023 on promises to impose tough austerity measures and transform Argentina’s economy. He has delivered on some fronts: monthly inflation has plunged from nearly 26% in December 2023 to 1.9% in August 2025, and the national budget is balanced for the first time in over a decade. “He has done more good than many people expected,” said Alejandro Werner, a former official with the International Monetary Fund, as reported by The New York Times. But Werner also cautioned, “Maybe I would choose to do it a different way. But, sometimes, to change things, you need somebody that’s a little bit of a fanatic to really move the needle. And he has done it.”
Yet the cost of Milei’s remedies has fallen hard on ordinary Argentines. As government spending was slashed, tens of thousands lost their jobs and subsidies for transportation, soup kitchens, and medications evaporated. Nearly a third of Argentines now live in poverty. “Austerity is hard to swallow,” said Andrei Roman, chief executive of AtlasIntel, referencing a poll that showed Milei’s disapproval rating had jumped from 44% in June to 54% in September. “At some point people get tired of waiting and they feel impoverished and they want to get out of it.”
The timing of the U.S. support is politically significant. Earlier this month, Milei’s party suffered a surprise defeat in Buenos Aires province, a bellwether for the October 26 midterm congressional elections, widely seen as a referendum on his economic policies. Political analyst Sergio Berensztein noted, “We have some time to go before the election, but the dynamic we had until last Friday was a disaster for Milei. Now he has the chance to revamp the campaign.” Argentina’s Economy Minister Luis Caputo echoed the optimism, posting on X, “Argentines, a new era begins. Let’s work together to make our country great again.”
Despite the immediate boost, analysts warn that American intervention is no panacea. Kimberley Sperrfechter, a Latin America economist at Capital Economics, observed that while the U.S. support “might buy the Milei administration some time, it doesn’t let it off the hook from addressing the misaligned exchange rate once the midterms are in the rearview mirror.” Argentina’s central bank has been forced to sell scarce reserves to defend the peso, raising concerns about the country’s ability to meet its international obligations. Argentina has defaulted on its debts multiple times and remains the International Monetary Fund’s largest debtor, having received a $20 billion financing package in April 2025 and a $40 billion bailout in 2018.
What’s striking about the U.S. move, according to both investors and analysts, is its unilateral nature and the explicit political backing for Milei’s government. Previous American interventions were typically coordinated with the IMF or the Federal Reserve, but this time the U.S. acted alone. “What’s becoming increasingly evident is that the U.S. is willing to deploy a range of tools—either to support strategic partners or to penalize adversaries—which increases uncertainty,” said Pramol Dhawan of Pimco, a major holder of Argentine bonds.
This approach is part of a broader Trump administration strategy in the region. While Argentina is rewarded for its alignment with Washington, other Latin American nations have faced U.S. penalties. The administration imposed 50% tariffs on Brazil after its courts convicted Trump ally Jair Bolsonaro on coup-plotting charges, and it “decertified” Colombia as a partner in the war on drugs after President Gustavo Petro criticized Trump’s deportation policies. As Eric Farnsworth, a former senior U.S. State Department official, put it, “You see a stark contrast between how the U.S. treats leaders who are perceived as friendly versus those it perceives as unfriendly. The definition of friendly is what has changed.”
At the same time, U.S. policy is facing pushback from regional powers. Brazilian President Luiz Inacio Lula da Silva, in his September 24 address to the United Nations, condemned U.S. interventionism and criticized Trump’s decision to label Latin American organized crime groups as terrorist organizations. Lula warned, “It is worrying to equate crime with terrorism,” and called instead for multilateral cooperation focused on dismantling criminal financial networks—a stance backed by Brazil’s recent launch of the Center for International Police Cooperation in Amazonas.
For Milei, the American bailout is a double-edged sword. While it may stabilize markets and buy time before the elections, it also deepens Argentina’s dependence on U.S. goodwill. Many Argentines remain wary of American influence after decades of perceived meddling. And as Werner from the IMF cautioned, “No amount of U.S. firepower will be sufficient” if Milei fails to correct course and focus on long-term economic stability. “This financial package needs to be tied to changes in policy.”
As the October midterms approach, all eyes are on whether Milei can convert this U.S.-backed reprieve into lasting economic recovery—and whether America’s new approach to picking winners and losers in Latin America will reshape the region’s future alliances.
