The US$20 billion private aid package to Argentina from United States bankswhich had been announced weeks ago, It has now been shelved and bankers are seeking a smaller, $5 billion loan plan.and in the short term to assist the government of Javier Milei, as revealed on Thursday by The Wall Street Journal.
Private assistance was initially provided by JP Morgan Chase, Bank of America and Citigroup, among other banks.
Donald Trump’s government, through the Treasury, supported President Milei and his reforms in the face of the financial turbulence prior to the October 26 elections. The aid package included a currency swap for US$20 billionbut Treasury Secretary Scott Bessent also announced plans for a separate credit line for another US$20,000 led by private banks.
Finally, La Libertad Avanza triumphed widely in the elections, a result that raised Argentine bonds, kept the dollar afloat and lowered the country’s risk.
Private sector loan was not implementedwhile banks awaited guidance from the Treasury Department on what collateral they could use to protect themselves from eventual losses. “Now, they claim it is no longer being seriously considered,” said The Wall Street Journal, according to people familiar with the conversations.
“Instead, banks are focusing on plans to lend Argentina around $5 billion.” through a short-term repurchase, or “repo”, where Argentina would exchange an investment portfolio for dollars from banks,” according to sources.
“Argentina is expected to use dollars to make an upcoming debt payment from around 4 billion dollars in January,” the newspaper states.
The Journal then claimed that “Milei’s government would then work with banks to borrow billions of dollars in the bond markets and use the proceeds to repay the recovery facility, likely within months,” according to sources. “Banks could be surprised if market conditions change and Argentina cannot sell new bonds or find other funds to repay them,” they point out.
According to the newspaper, “Talks are still in the early stages and could change or fall apart.”
A Treasury spokesman said: “The United States continues to trust in the commitment of President Milei and Minister Caputo with the founding principles as they work to make Argentina great again,” and declined to provide more specific details about U.S. financial support for Argentina.
Support for Argentina has generated controversy for the Trump administration, especially because it happened in the midst of the US government shutdown, which lasted a record 43 days due to lack of funding, a period in which public employees stopped receiving their salaries. There were several formal requests from legislators to Bessent, demanding explanations for the aid to Argentina “in the midst of the suffering of the American people.”
There was even a letter from Senator Elizabeth Warren addressed to the banks JPMorgan, Bank of America, Morgan Stanley, Citigroup, Goldman Sachs and Wells Fargo asking them to explain whether the loans would require guarantees that could harm American taxpayers. In their response, the majority alluded to confidentiality issues and avoided providing details.
Bessent came out to defend the aid several times, saying that Argentina is a strong ally against China’s influence in the region. And after the elections, he said that “the Argentine economic bridge has now provided benefits to the American people.”