The Argentine government has completed the repayment of funds borrowed from a $20 billion credit line arranged with the US Treasury under the prior US administration, Treasury Secretary Scott Bessent announced on Friday. This repayment is a vital development for President Javier Milei's administration as it aims to rebuild financial credibility within an economy frequently burdened by instability.
Bessent noted that in addition to meeting obligations to bondholders, Milei's government swiftly and fully settled its limited draw from this US-backed credit facility, although he did not specify the exact amount repaid. According to the Treasury’s most recent status report, Argentina’s central bank engaged in peso-dollar swaps amounting to $2.5 billion by the end of October, a detail confirmed by the Argentine Central Bank following Bessent’s statement.
This financing arrangement, which was both contentious and largely unprecedented, provided essential US dollar liquidity to Argentina amidst significant economic stress. The aid effectively arrested a steep market downturn in Argentina ahead of the country's critical midterm elections last October, during which Milei’s libertarian party secured a decisive victory. This victory reinforced public support for the government’s austere fiscal policies and alleviated some investor concerns regarding the country’s debt repayment capabilities.
Reflecting renewed market confidence, the current administration issued a dollar-denominated bond last month, marking Argentina’s first such issuance in eight years and signaling a potential re-entry into international capital markets.
Following Argentina’s repayment, Bessent indicated that the US Exchange Stabilization Fund, which financed the bailout, no longer holds Argentine pesos. He characterized the repayment as a landmark event that justified the US Treasury’s intervention, despite domestic skepticism and critiques about risks to American taxpayers and the opaque, seemingly unconditional nature of the loan. Bessent asserted, "Stabilizing a strong American ally – and making tens of millions in profit for Americans – is an America First homerun deal. Setting the course for Latin America, a strong and stable Argentina that helps anchor a prosperous Western Hemisphere is in our clear best interest."
Argentina’s Economy Minister, Luis Caputo, expressed gratitude towards the US administration, appreciating the trust placed in Argentina’s economic policy. Caputo highlighted the strategic value of this geopolitical alliance, affirming the significance of support from the world's foremost economic power.
Despite these positive developments, Argentina's economic challenges persist. The nation’s foreign exchange reserves remain critically low, and the government faces mounting pressure from imminent repayments on outstanding loans from the International Monetary Fund and other private creditors.