The Trump administration formally proceeded on Thursday with its financial rescue plan for Argentina. Treasury Secretary Scott Bessent confirmed a direct purchase of pesos and the finalization of a $20 billion lifeline.
While the specific terms of this economic support package remain undisclosed, Mr. Bessent indicated that the funds would be provided via a currency swap with Argentina’s central bank. Global investors have eagerly awaited these details, especially as critics point out that this bailout could significantly benefit affluent fund managers, even as American farmers face difficulties and the U.S. government navigates a shutdown.
Officials from both nations worked intensely over the past four days to finalize the bailout terms. This urgency comes ahead of crucial legislative elections in Argentina later this month and an upcoming visit to Washington by President Javier Milei, Argentina’s libertarian leader and a close ally of President Trump.
“Argentina faces a moment of acute illiquidity,” Mr. Bessent stated on X. “The U.S. Treasury is prepared, immediately, to take whatever exceptional measures are warranted to provide stability to markets.”
The Treasury secretary also highlighted that American business leaders expressed a desire to strengthen ties with Argentina, affirming the Trump administration’s commitment to supporting its Latin American partner.
However, the administration’s decision to bolster Argentina’s economy is sparking concerns. Many question whether the primary objective is to safeguard wealthy investors whose substantial stakes in Argentina could collapse if its economy deteriorates.
These concerns are compounded by the fact that prominent hedge funds, including those managed by associates of Mr. Bessent, stand to gain considerably from an Argentine economic stabilization. Investment giants like BlackRock, Fidelity, and Pimco hold significant investments in Argentina. Additionally, individual investors such as Stanley Druckenmiller and Robert Citrone, both former colleagues of Mr. Bessent during his time as an investor for George Soros, are also deeply invested.
Thursday’s Treasury intervention provided immediate relief to Argentina’s struggling financial markets, which have been plagued by a severe cash shortage. Dollar-denominated bonds maturing in 2035 surged, returning to levels seen when Mr. Bessent first announced U.S. involvement. The peso also saw a rebound, though currency experts caution that it might face renewed pressure without a comprehensive, long-term financial solution for the country.
The idea of the Trump administration rescuing Argentina’s economy and aiding affluent investors, particularly when federal employees are unpaid during a government shutdown and American farmers await economic relief, has drawn sharp criticism from Democrats, agricultural groups, and other stakeholders.
On Thursday, a bipartisan group of eight Democratic senators introduced legislation aimed at preventing the Treasury Department from utilizing its Exchange Stabilization Fund to prop up Argentina’s finances.
“It is inexplicable that President Trump is propping up a foreign government, while he shuts down our own,” remarked Senator Elizabeth Warren of Massachusetts, a key Democrat on the banking committee and co-drafter of the legislation. “Trump promised ‘America First,’ but he’s putting himself and his billionaire buddies first and sticking Americans with the bill.”
While the legislation is unlikely to pass, it underscores the political challenges Republicans might encounter regarding the Argentina bailout.
Prior to his meeting with Luis Caputo, Argentina’s economy minister, Mr. Bessent had maintained last weekend that the proposed $20 billion central bank swap line was neither a bailout for Argentina nor a gift to wealthy investors.
“This trope that we’re helping out wealthy Americans with interest down there couldn’t be more false,” Mr. Bessent told CNBC. “What we’re doing is maintaining a U.S. strategic interest in the Western Hemisphere.”
International investors have historically viewed Argentina as a prime opportunity for profit, particularly through its government debt. Often, these investors are not the original bondholders but have acquired debt at a discount, betting on eventual repayment or renegotiation.
This strategy is now showing signs of success. This past summer, a Fidelity fund attributed its gains from Argentine debt to offsetting losses from investments in other emerging market nations like Venezuela and Ukraine.
Notably, wealthy American investors with close ties to Mr. Bessent are poised for substantial gains.
Mr. Druckenmiller, a mentor to Mr. Bessent at Soros Fund Management, leads the Duquesne family office, which was the second-largest investor in Argentina’s primary exchange-traded fund, a collection of Argentine stocks.
Robert Citrone, founder of Discovery Capital Management, has centered his global investment strategy on Latin America, with Argentina representing his fund’s largest regional commitment. Mr. Citrone has publicly stated that during his collaboration with Mr. Bessent under George Soros in 2013, he persuaded them to make their renowned bet against the Japanese yen, and humorously claims responsibility for 75% of Mr. Bessent’s bonus during that period.
“I kind of convinced George and Scott Bessent at the time to go big on that. And, you know, Scott says I’m responsible for 75 percent of his bonus at Soros, kind of jokingly, over that time,” Mr. Citrone recounted in a May podcast interview hosted by Goldman Sachs.
It remains unconfirmed whether Mr. Citrone influenced Mr. Bessent’s decision to support Argentina’s currency. However, two sources familiar with the situation indicated that Mr. Citrone was in close communication with Mr. Bessent before last month’s Treasury announcement. He reportedly argued that a collapse of Argentina’s currency would also lead to the political downfall of Mr. Milei.
Elliott Hulse, a Treasury Department spokesman, did not comment on Mr. Bessent’s discussions regarding Argentina with Mr. Druckenmiller or Mr. Citrone. Mr. Citrone’s spokesman declined to comment. Mr. Druckenmiller affirmed that he had no communication with Mr. Bessent about Argentina either before or after last month’s bailout announcement.
Argentine media outlets had previously reported on Mr. Bessent’s connections to Mr. Citrone.
Mr. Milei’s party faced a significant setback in a key provincial election in September, and analysts predict another unfavorable outcome in legislative polls this month. Such a defeat would likely hinder Mr. Milei’s ability to pursue his pro-market, austerity-focused policies, which the Trump administration has both commended and, in many aspects, emulated.
Some conservative commentators have criticized the Treasury’s plans for Argentina, suggesting that the deal might inadvertently empower the country’s leftist, pro-spending opposition, which is widely expected to perform strongly in the upcoming elections.
Mr. Citrone, alongside leaders of the Conservative Political Action Conference (CPAC), may also have been instrumental in lobbying both the International Monetary Fund and Mr. Bessent for Argentina’s bailout, according to two individuals familiar with the agreement. In April, the I.M.F. had already provided Argentina with its own $20 billion bailout package. This 48-month loan marked Argentina’s 23rd such economic support agreement from the fund since the 1950s.
Just days after the I.M.F. deal was announced in April, Mr. Citrone reportedly traveled to Buenos Aires on a plane owned by a leader of Tactic Global, known as CPAC’s lobbying arm, to meet with Mr. Milei. The plane’s owner, Leonardo Scatturice, a co-founder of Tactic, has accumulated wealth from lucrative government contracts awarded by Mr. Milei’s administration.
Mr. Citrone met with the Argentine president only hours before Mr. Bessent arrived in the capital separately.
During his visit, Mr. Bessent formally announced the I.M.F. deal. These funds are designed to help Argentina relax its currency controls while adhering to the government’s plans to reduce subsidies and spending.
Last month, Mr. Bessent confirmed that the United States would offer additional economic assistance to Argentina through a $20 billion financial lifeline. The Treasury secretary further explained that Washington hoped this support would deter Argentina from ceding mining rights to China. For years, Argentina’s economy has largely been sustained by an $18 billion currency swap from China.
The United States has not yet specified any safeguards to protect taxpayer funds. Mr. Bessent reiterated that the currency swap intended for Argentina does not constitute a bailout.
“We are not putting money into Argentina,” Mr. Bessent stated on CNBC.
The political implications of supporting Argentina are particularly complex in the U.S., especially since China has been purchasing soybeans from Argentine farmers instead of American growers this year. Given Argentina’s history as the most frequent recipient of I.M.F. bailouts and its status as the institution’s largest debtor, questions arise regarding its capacity to repay the United States.
“They can call it what they want, but it’s a bailout,” asserted Monica de Bolle, a senior fellow at the Peterson Institute for International Economics. “It’s a country in crisis, it’s running out of dollars, and the U.S. is giving the country dollars. That’s a bailout by definition.”
During negotiations for the support package, U.S. officials reportedly pushed Argentina to reduce its ties with China and sought access to its uranium and lithium reserves, according to a source familiar with the discussions.
However, in Argentina, provincial legislators and governors hold greater authority over such contracts than President Milei. Consequently, the U.S. Treasury’s backing of the Argentine president may not necessarily translate into more American companies securing mining rights.
Mr. Bessent emphasized on Thursday that strengthening Argentina is vital for national and economic security.
“The success of Argentina’s reform agenda is of systemic importance, and a strong, stable Argentina which helps anchor a prosperous Western Hemisphere is in the strategic interest of the United States,” Mr. Bessent concluded.