Trump Admin Agrees to $20 Billion Rescue Plan for Argentina

The U.S. government has finalized a $20 billion economic rescue plan for Argentina, Treasury Secretary Scott Bessent announced on Oct. 9.

Bessent stated last month that all options were on the table to support Argentine President Javier Milei’s economic agenda by employing multiple stabilization tools.

Writing in a lengthy X post, the senior administration official confirmed that the United States will follow through on its commitment by purchasing Argentine pesos and finalizing a $20 billion currency swap plan with the Latin American nation’s central bank.

“The U.S. Treasury is prepared, immediately, to take whatever exceptional measures are warranted to provide stability to markets,” Bessent said on social media.

“Argentina faces a moment of acute illiquidity. The international community … is unified behind Argentina and its prudent fiscal strategy, but only the United States can act swiftly. And act we will.”

Direct foreign currency purchases by governments or central banks are a policy aimed at stabilizing or influencing currencies and exchange rates. While this mechanism has not been used on a wide scale in recent years, it was a standard tool in the 1980s to reverse the significant appreciation of the U.S. dollar.

Bessent rebutted claims that the administration’s action is a bailout.

“It’s not a bailout at all,” Bessent told Fox News host Laura Ingraham. “There’s no money being transferred. The [Exchange Stabilization Fund] has never lost money. It’s not going to lose money here. I was in the investment business, mostly currencies, for 40 years. You’re supposed to buy low, sell high. And the Argentine peso is undervalued.”

The announcement came after four days of talks with Argentine officials, including Finance Minister Luis Caputo.

Global Reaction

Local financial markets strengthened on the news.

The S&P MERVAL Index—a benchmark stock market index for Argentina—climbed 5.8 percent. Global X MSCI Argentina ETF—an exchange-traded fund that tracks large and mid-sized companies—surged 6.47 percent and rose about 0.8 percent in after-hours trading.

Argentina’s 2035 bond rose 4.6 cents to trade at 60.58 cents on the dollar, while the peso advanced as much as 2 percent against the U.S. dollar.

Milei, who is scheduled to meet with President Donald Trump and Bessent next week at the Oval Office, expressed gratitude for U.S. support.

“Together, as the closest of allies, we will make a hemisphere of economic freedom and prosperity. We will work hard every day to provide opportunity for our people,” Milei said in a statement.

International Monetary Fund (IMF) Director Kristalina Georgieva also congratulated Washington and Buenos Aires on the arrangement.

“The IMF is fully aligned in support of the country’s strong economic program, anchored on fiscal discipline and a robust FX regime to facilitate reserve accumulation,” Georgieva said on X.

This past spring, the IMF agreed to issue a new $20 billion loan program to stabilize the Argentine economy. Key provisions of the agreement require the Milei government to loosen currency controls, implement structural reforms, and strengthen fiscal discipline.

Lifeline Ahead of Midterm Elections

The backstop is meant to provide Milei and his La Libertad Avanza party some breathing room heading into this month’s midterm elections.

After suffering an electoral blow in last month’s Buenos Aires Province elections at the hands of the left-leaning Peronist-Kirchnerista coalition, chaos engulfed Argentina’s financial markets. Institutional investors feared that Milei’s grip on power would be eroded, and he would be unable to implement all of his economic reforms.

Stocks tanked, the peso declined, and bond prices plummeted—capturing the attention of the Trump administration.

“The plan is as long as President Milei continues with his strong economic policies to help him, to bridge him to the election. We are not going to let a disequilibrium in the market cause a backup in his substantial economic reforms,” Bessent told Fox Business last month.

Meanwhile, several lawmakers, including Sen. Elizabeth Warren (D-Mass.), criticized the plan.

In a Sept. 23 letter to Bessent, Warren wrote: “At a time when Americans are struggling to afford groceries, rent, credit card bills, and other debt payments … it is deeply troubling that the President intends to use significant emergency funds to inflate the value of a foreign government’s currency and bolster its financial markets.”

Argentina’s legislative elections are scheduled for Oct. 26. Half of the seats in the National Congress—127 in the lower house and 24 in the upper house—will be up for grabs. Polls indicate that Milei’s La Libertad Avanza is enjoying momentum while the Peronist-Kirchnerista bloc is losing ground.

Reuters contributed to this report.