U.S. Banks Scrap $20 Billion Lifeline For Argentina, Offer Smaller Fix
The massive Wall Street rescue that was supposed to anchor Javier Milei’s economic turnaround is shrinking fast.
A plan under which JPMorgan Chase, Bank of America and Citigroup would mobilize up to $20 billion in financing for Argentina has been put on hold, with the banks instead working on a much smaller short-term package of around $5 billion.
The banking deal was meant to sit on top of an earlier $20 billion currency-stabilization arrangement agreed between Washington and Buenos Aires.
Using the U.S. Treasury’s Exchange Stabilization Fund, the Trump administration approved a dollar swap that helped calm markets and steady the peso in the run-up to critical midterm elections that strengthened Milei’s mandate.
Officials later boasted that the operation was not only stabilizing Argentina but actually turning a profit for U.S. taxpayers.
The second leg of the plan was far more ambitious: a matching $20 billion in private financing that would give Argentina up to $40 billion in combined firepower to roll over debts and rebuild credibility with investors.
But banks balked at the size and risk of the exposure. Argentina has defaulted repeatedly, still owes roughly $40 billion to the IMF, and continues to live with fragile public finances despite early progress on inflation and spending cuts.
Wall Street demands collateral and credibility
Instead of a jumbo credit line, the current proposal centers on a “repo” facility of about $5 billion. In simple terms, Argentina would temporarily hand over financial assets as collateral in exchange for dollars, then buy them back later.
The money would help cover a looming debt payment of around $4 billion in January, buying time but not resolving the country’s chronic dependence on external support.
For Milei, the downsized deal is both a warning and a test. Washington’s backing remains unusually strong, but Wall Street is signaling that political sympathy is no substitute for hard collateral and credible institutions.
For investors and observers across Latin America, Argentina’s case shows how years of interventionist policy and serial defaults leave even a reform-minded government struggling to secure the scale of private capital it needs.
This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error