U.S. Treasury Secretary Scott Bessent announced Wednesday on X that the United States is negotiating a $20 billion swap line with Argentina’s central bank and is prepared to take necessary measures to support the country.
Bessent said the U.S. is prepared to purchase Argentina’s U.S. dollar-denominated bonds and will do so as conditions warrant. He also said that the U.S. is also set to deliver significant standby credit via the Exchange Stabilization Fund.
“Argentina has the tools to defeat speculators, including those who seek to destabilize Argentina’s markets for political objectives,” Bessent said. “I will be watching developments closely and the Treasury remains fully prepared to do what is necessary.”
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Bessent also said that the U.S. is ready to purchase secondary or primary government debt and is working with the Argentine government to end the tax holiday for commodity producers converting foreign exchange. He said that numerous U.S. companies had told him they intended to “make substantial foreign direct investments” in multiple Argentine sectors “in the event of a positive election outcome,” but gave no details.
Argentine assets rose sharply after Bessent’s announcements. Investors claim that regardless of whether the money materializes or not,the prospect alone will likely be enough to put a floor under Argentina’s stocks, bonds and currencies ahead of key national elections late next month.
“That’s an outsized package and coming from Scott Bessent — who understands markets — it should stabilize here,” Ray Zucaro, chief investment officer at RVX Asset Management LLC in Miami, said.
Argentina’s peso currency has strengthened this week, a sharp reversal from last week, when the country’s central bank ran through more than $1 billion of reserves to defend its currency.
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On Tuesday, Trump said that he would support Argentina, but didn’t think it needed a bailout. The head of the International Monetary Fund, Kristalina Georgieva, said after meeting Milei on Wednesday in New York that it is very important for Argentina to stay the course on economic reforms. She said that support like the one offered by the Treasury “strengthens the program” between the IMF and the grains exporter. Argentina is due to pay the IMF $4.8 billion next year.
“The United States needs to be careful not to raise expectations they can’t fulfill,” said Martin Muehleisen, former strategy chief of the IMF and now a senior fellow at the Atlantic Council.
“Argentina still needs to deliver on difficult underlying reforms for which there is currently no indication because of a lack of bipartisan support.”