Large bailout abandoned as conditions improve
A previously planned $20 billion rescue package for Argentina led by JPMorgan Chase, Bank of America, and Citigroup has been put on hold. The banks are now pursuing a far smaller, short-term solution for the country’s stressed finances, according to people familiar with ongoing discussions.
The original plan, announced this fall alongside a $20 billion U.S. Treasury currency swap, was intended to support President Javier Milei as his pro-reform party faced political headwinds. But after Milei secured a strong win in October’s congressional elections, Argentine bonds and the peso rallied, reducing the perceived urgency of a large bank-led bailout.
Shift toward a short-term repo facility
Bankers had been waiting for guidance from the U.S. Treasury on collateral and guarantees needed to protect them from potential losses. With no clear path forward, the large debt facility is no longer under serious consideration, the sources said.
Instead, the banks are working on a more modest plan: a $5 billion repo loan in which Argentina would exchange a portfolio of financial assets for dollars. The government would likely use the funds to meet a $4 billion debt payment due in January. Repayment of the repo facility would come months later, financed by new Argentine bond sales—an approach that could strain banks if market conditions deteriorate and Argentina fails to raise the required capital.
Talks remain preliminary and could shift or collapse, the sources said. Finance Minister Luis Caputo has promised to outline Argentina’s reserve-building strategy by early December.
U.S. support under scrutiny
While banks reassess their exposure, the U.S. Treasury has already delivered substantial backing to Milei’s administration. It is unclear how much of the $20 billion swap line Argentina has used, but central bank data shows a $2.5 billion rise in short-term foreign currency swaps between late September and late October.
The U.S. also transferred about $900 million in IMF special drawing rights to Argentina. A Treasury spokesperson said Washington remains confident in Milei and Caputo’s economic direction but offered no details about how the funds are being deployed. On Oct. 29, Treasury Secretary Scott Bessent posted that the “Argentine economic bridge has now turned a profit for the American people.”
Calls for transparency intensify
Former Treasury officials have criticized the opaque nature of U.S. support. Brad Setser of the Council on Foreign Relations said the lack of disclosure marks a departure from past episodes, such as aid to Mexico in the 1990s. “There is essentially no information on how that money is being used,” Setser said, calling the situation “unusual” for the use of U.S. taxpayer funds.
As discussions continue, Argentina faces the twin challenge of stabilizing reserves and managing near-term obligations—now with a smaller financial bridge than initially envisioned.
