US ready to support Argentina with $20 billion swap line, Bessent says

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By Susan Heavey and Andrea Shalal

WASHINGTON (Reuters) -The U.S. is currently in negotiations for a $20 billion swap line with Argentina’s central bank and stands ready to do what is needed to support the South American country, U.S. Treasury Secretary Scott Bessent said on Wednesday in a post on X.

Bessent said the U.S. is prepared to purchase Argentina’s U.S. dollar-denominated bonds and will do so as conditions warrant. The U.S. is also set to deliver significant standby credit via the Exchange Stabilization Fund, he said.

“Argentina has the tools to defeat speculators, including those who seek to destabilize Argentina’s markets for political objectives,” he said. “I will be watching developments closely and the Treasury remains fully prepared to do what is necessary.”

Bessent, a former hedge fund executive, also said the U.S. is ready to purchase secondary or primary government debt and is working with the Argentine government to end the tax holiday for commodity producers converting foreign exchange.

He said numerous U.S. companies had told him they intended to “make substantial foreign direct investments” in multiple Argentine sectors “in the event of a positive election outcome,” but gave no details.

Argentina votes on October 26 for legislative midterm elections, in which President Javier Milei’s right-wing party aims to gain seats to strengthen its minority position.

Argentine assets rose sharply on Wednesday after Bessent provided details on his previous pledge to support Latin America’s third-largest economy and Milei, a close ally of President Donald Trump.

The country’s embattled peso currency has strengthened this week in a sharp reversal from last week, when the Argentine central bank burned through more than $1 billion of reserves to defend its currency.

Markets grew panicked after Milei’s party suffered a larger-than-expected loss in a local election in Buenos Aires, reflecting growing frustration with austerity measures and triggering concern over the future of Milei’s reform agenda.

Trump on Tuesday said he would support Argentina but did not think it needed a bailout.

In an interview on Fox Business Network on Wednesday, Bessent underscored U.S. support for Argentina and Milei, adding that he did not think the market had lost confidence in the Argentine leader, but was remembering earlier crises.

“We are not going to let a disequilibrium in the market … cause a backup in his substantial economic reforms,” Bessent told the network’s “Mornings with Maria” program.

“I think the market is looking in the rear-view mirror and is looking at decades, if not a century, of terrible Argentinian mismanagement,” he said. “People are skittish. It’s very hard to believe that it is different this time, but I believe with President Milei it is.”

Milei, who met with Trump and Bessent on Tuesday, thanked the U.S. for its support.

“Thank you President Donald Trump and Mr. Secretary Scott Bessent for your firm support and confidence in the Argentine people,” he said in response on X.

“We value deeply our friendship with the United States and your commitment to strengthen our partnership on the basis of shared values. Together we will build a path of stability, prosperity, and freedom. MAGA!”

Argentina’s government bond prices rallied after Bessent announced details of support, with the country’s 2030 issue up more than four cents.

“Well, what more can be added than thank you Secretary Scott Bessent,” Argentina’s Economy Minister Luis Caputo wrote on X. “Let’s all work together to make our country great again!”

(Reporting by Susan Heavey, Maiya Keidan and Andrea Shalal; Additional reporting by Aida Pelaez-Fernandez; Editing by Katharine Jackson and Andrea Ricci)