Treasury Secretary Scott Bessent announced the deal on X on Thursday, saying, “Argentina faces a moment of acute illiquidity.
The international community—including [the International Monetary Fund]—is unified behind Argentina and its prudent fiscal strategy, but only the United States can act swiftly.
And act we will.” The United States President Donald Trump’s administration has bought Argentinian pesos and finalized a $20 billion currency swap framework with Argentina’s central bank in an effort to strengthen the nation’s struggling finances.
Following four days of meetings with his Argentine colleague, Luis Caputo, who conveyed his “deepest gratitude” to Bessent on X following the announcement of the pact, Bessent made his remarks.
The assistance comes as Trump’s close buddy, right-wing President Javier Milei of Argentina, has been dealing with volatility in the financial markets.
As investors watched the country’s central bank quickly deplete its meager foreign exchange reserves in an attempt to protect the plummeting peso, Argentine bond prices fell precipitously at the end of September.
The government had to sell additional dollars on the spot market to support the currency after it dropped more than 6% in a single day in early October, the largest decline since September 8.
Despite the Trump administration’s insistence that this program is not a bailout, Democratic senators and US farmers have criticized the agreement as being just that—a bailout—for a nation that has benefited from soybean sales to China at the expense of US farmers.
The No Argentina Bailout Act, which would prevent the Treasury Department from using its Exchange Stabilization Fund to aid Argentina, was introduced by a group of Democratic senators following the announcement on Thursday.
In a statement, Democratic Senator Elizabeth Warren stated, “It is inexplicable that President Trump is supporting a foreign government while he shuts down our own.”
“Trump is putting himself and his billionaire friends first and leaving Americans with the bill, despite his promise of ‘America First.'”
Once a trailblazing outsider, Milei promised to curb unchecked inflation and promote stability to achieve an unexpected election victory in 2023.
Milei has been referred to as Trump’s “favorite president” in the past by his libertarian ally.
Financial assistance from the US has “bought some time for Milei.”
In early October, Andres Abadia, the head of Pantheon Macroeconomics’ Latin America division, told Al Jazeera, “It’s a lifeline, but not a panacea.”
“Inflation risks are on the upside … If Milei performs badly in October, the negative political and financial noise would rush back,” he continued.
“For Milei, that would be a dire situation,” Abadia remarked.
On October 26, Argentina will have its midterm elections.
