Buenos Aires (Argentina) (AFP) – Argentine stocks surged Wednesday on a new US promise of aid for embattled President Javier Milei, despite Donald Trump conditioning the assistance on his ally winning upcoming midterm elections. Some stocks on the benchmark Merval index rose by almost 10 percent on the announcement by US Treasury Secretary Scott Bessent that his department was working on the second $20 billion “facility” for Argentina in as many months. The new program brings the total promised US assistance for the South American country to a whopping $40 billion.
Bessent told reporters in Washington that the new aid “would be adjacent to our swap line” announced in September, which already totaled $20 billion. He said the new bailout would come from “private banks and sovereign wealth funds” and would be “more aimed at the debt market,” amid growing concerns over Argentina’s ability to meet its looming debt repayments. Bessent made the announcement a day after Trump hosted the right-wing Milei at the White House, in a bid to boost the Argentine leader ahead of midterm elections on October 26.
Milei, once a global poster boy for budget-slashing libertarian politics, is heading into the polls diminished by his failure to stabilize Argentina’s ailing peso, despite spending nearly all the Central Bank’s dollar reserves to prop it up. Bessent last week said that the US Treasury had begun purchasing pesos to help support the currency. Milei has also faced a growing rebellion in Congress over his austerity measures and is still reeling from a corruption scandal engulfing his sister and right-hand woman, Karina Milei. Last month, he suffered a stunning defeat in Buenos Aires provincial polls seen as a key bellwether of his support.
Opinion polls show his bloc running neck-and-neck with the center-left opposition in the midterms, but Milei’s La Libertad Avanza coalition is expected to fall far short of winning an outright majority. Political scientist Gustavo Marangoni, head of the M&R polling firm, told AFP that Milei’s party had “no chance of winning a majority,” predicting he would win around one-third of the seats up for grabs. Trump threatened Argentine voters with withdrawing aid if his ally was defeated. “If he loses, we are not going to be generous with Argentina,” he warned.
Economist Carlos Melconian, former president of the state-owned Banco Nacion, reacted angrily to Trump’s remarks, calling it “a quasi-colonial incursion” into Argentina’s affairs. “Trump doesn’t want to save the country, he only wants to save Milei,” centrist Senator Martin Lousteau said. On Wednesday, Bessent assured that Milei would continue to enjoy US support as long as he could continue to veto legislation passed by parliament that did not fit his agenda. “It is not election-specific, it is policy-specific,” he said. “So as long as Argentina continues enacting good policy, they will have US support,” he said.
Milei enacted sweeping budget cuts after taking office in December 2023 on a promise to quell chronically high inflation and revive the sputtering economy. But his reforms left tens of thousands of public servants out of a job, caused consumer spending to nosedive and left many of Argentina’s most vulnerable citizens living on the breadline. In an interview with CNBC broadcast Wednesday, the 54-year-old president said he had “no intention of changing course until the end of my term.” “I am committed to the agenda of lowering taxes, deregulating and keeping the economy growing,” he said.
© 2024 AFP
