The United States is discussing a US$20-billion swap line with Argentina and is ready to buy up the country’s dollar bonds, Treasury Secretary Scott Bessent said, giving President Javier Milei “a bridge” until key midterm elections next month.
The move is a vote of confidence from US President Donald Trump for libertarian ally Milei following a meeting between the two leaders and their teams Tuesday on the sidelines of the UN General Assembly in New York.
“The Treasury is currently in negotiations with Argentine officials for a US$20 -illion swap line with the Central Bank,” Bessent said on X. “We are working in close coordination with the Argentine government to prevent excessive volatility.”
Argentina markets, which have been roiled in the past few weeks after a weak showing by Milei in a local election, have surged this week in anticipation of US support, first signalled Monday. They jumped again on the announcement Wednesday, with notes due 2035 rising some 3.3 cents on the dollar to the highest since September 5.
“It clears up uncertainty about the liquidity difficulties generated by the economic program so far,” Federico Filippini, Chief Economist at Adcap Grupo Financiero. “The announcement that the Treasury would be willing to directly purchase sovereign debt significantly increases the likelihood of a fall in country risk to the point that the government could issue debt in early 2026.”
Speaking on Fox on Wednesday morning, Bessent called the aid a “bridge to the election,” referencing Argentina’s midterms on October 26.
“I don’t think the market has lost confidence in him, I think the market is looking in the rear view mirror and looking at decades, about a century, of terrible Argentinian mismanagement,” Bessent said.
Bailout
This marks the second major bailout for Argentina under Trump, as his administration takes on a more prominent role in Latin American politics. In 2018, Trump pushed the International Monetary Fund to approve an initial US$50-billion programme for the country under then-president Mauricio Macri, a deal that quickly unraveled.
Since then, the IMF has struck two more agreements with Argentina, which has defaulted on its sovereign debt multiple times, including the US$20-billion package Milei secured in April.
Now in his second term, Trump has stoked tensions with Brazilian President Luiz Inácio Lula da Silva, threatened new tariffs on Mexican President Claudia Sheinbaum and ordered strikes on boats belonging to alleged drug-traffickers in the Caribbean as a warning to Venezuela’s Nicolás Maduro. All the while, Milei has made repeated trips to the US to publicly praise Trump.
Milei casts himself as a free-market champion but has increasingly intervened in the economy to support the peso, seeking to prevent annual inflation from spiking again ahead of the midterm elections. Inflation has dropped to 34 percent from 289 percent last year, and Milei needs a strong electoral showing to bolster his slim minority in Congress, where opposition lawmakers have so far resisted his market-friendly agenda and economic reforms.
The Trump administration’s swap line would be bigger than Argentina’s line with China’s central bank, which is about $18 billion.
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