US launches $20 billion rescue plan for Argentina’s economy

The US Treasury Department initiated the rescue plan on Thursday by signing a $20 billion swap agreement with Argentina and purchasing pesos on the open market.

This action fulfilled President Donald Trump’s promise to support the struggling country, leading to a sharp increase in the value of the peso and Argentina’s dollar-denominated bonds.

US Treasury Secretary Scott Bessent announced these measures on X, stating, “The US Treasury Department is prepared to immediately take any extraordinary measures necessary to stabilize the markets.”

Argentina’s 2035 bond rose 4.5 cents to trade at 60.5 cents, while the peso/dollar exchange rate closed at 1,418, marking a 0.8% increase after a 3% drop the previous day.

Local stocks surged 5.3% on Thursday. They had reached their lowest level of 2025 last month, just days before Bessent first pledged support. Argentine stocks traded on US exchanges gained 13% in value.

In a statement at the end of four days of talks with Argentine Finance Minister Luis Caputo, Bessent noted that officials from the International Monetary Fund (IMF), which has a $20 billion loan program with Argentina, also participated in the discussions.

IMF Managing Director Kristalina Georgieva applauded the US move in a post on X, saying the IMF “supports the country’s strong economic program, fiscal discipline, and a robust foreign exchange regime to facilitate reserve accumulation.”

A spokesperson for the US Treasury Department declined to provide further details, including the amount of pesos purchased and how the $20 billion currency swap line would be structured.

Bessent had previously pledged that the department would support Argentina using its $221 billion Exchange Stabilization Fund (ESF) and its majority stake in IMF reserve assets known as Special Drawing Rights.

Speaking to Fox News, Bessent argued that this action was not a bailout, stating that no money was transferred to Buenos Aires and that the ESF “has never lost money and will not lose money in this case.”

Bessent added that this assistance provides strategic benefits to the US. These benefits include Argentine leader Javier Milei’s commitment to “get China out of Argentina” and his open stance on allowing US companies to develop rare earth element and uranium resources.

Bessent said Milei’s reforms are a success that is “systemically important for the US, helping to solidify the prosperity of the Western Hemisphere.”

Milei, who is scheduled to meet with Trump during the IMF and World Bank annual meetings in Washington next week, thanked Bessent and President Donald Trump in a message posted on X.

“As the closest of allies, together we will build a hemisphere where economic freedom and prosperity prevail. We will work hard every day to provide opportunities for our people,” Milei wrote.

According to the New York Times, major global investors are also awaiting the details of the rescue package. Critics say the package will benefit wealthy fund managers at a time when American farmers are struggling and the US government is shut down.

Funds from investment firms like BlackRock, Fidelity, and Pimco are heavily invested in Argentina, as are investors like Stanley Druckenmiller and Robert Citrone. Both men worked with Bessent when he was an investor for George Soros.

International investors have long seen Argentina as a place to profit, particularly concerning the sovereign debt undertaken by successive leaders.

In many cases, the investors are not the original bondholders but purchased the debt at a discount from the country’s original lenders, betting that the pledges would eventually be repaid or renegotiated.

This view appears to be bearing fruit. This summer, a Fidelity fund noted that its gains from the country’s debt helped offset losses from investments in other emerging market countries, including Venezuela and Ukraine.

Notably, wealthy Americans with close ties to Bessent appear poised to make significant gains.

Druckenmiller was Bessent’s mentor at Soros Fund Management. The Duquesne family office, which Bessent manages, was the second-largest investor in a pool of Argentine stocks, the country’s second-largest exchange-traded fund.

Robert Citrone, founder of Discovery Capital Management, has made Latin America his largest investment in the world, and Argentina is the fund’s biggest investment in the region.

Citrone had said that while working with Bessent under Soros in 2013, he convinced them to make their now-famous bet against the Japanese yen and was responsible for most of the bonus Bessent earned.

“At the time, I convinced George and Scott Bessent to go big on that. Scott jokingly says I’m responsible for 75% of the bonus he earned at Soros during that period,” Citrone said in an interview on a Goldman Sachs podcast in May.

It is unclear whether Citrone played any role in persuading Bessent to support the Argentine peso.

However, two people familiar with the deal said Citrone was in close contact with Bessent before the Treasury Department’s announcement last month, arguing that if Argentina’s currency collapsed, Milei’s political fate would collapse with it.

Citrone told Bessent that if Milei lost the upcoming elections, Argentina would turn to China for more economic aid.

Citrone also emphasized to Bessent that such an outcome would mean the US losing one of its most loyal allies in Latin America.

According to the NYT report, Citrone and leaders of the Conservative Political Action Conference (CPAC) may also have been influential in lobbying the IMF and Bessent to rescue Argentina.

In April, the IMF supported the Argentine economy with a $20 billion rescue deal. The 48-month loan was the 23rd economic support package Argentina has received from the fund since the 1950s.

Just days after the IMF deal was announced in April, Citrone flew to Buenos Aires on a plane belonging to a leader of Tactic Global, known as CPAC’s lobbying arm, to meet with Milei, according to an adviser to the Trump administration and Argentine media reports.

The plane belonged to Leonardo Scatturice, one of Tactic’s co-founders, who had made a large fortune from lucrative government contracts distributed by the Milei government.

Citrone met with Milei just hours before Bessent, who arrived in the nation’s capital on a separate plane.