Late last year, the United States effectively loaned $20 billion to the Argentine central bank, which immediately drew criticism as a “bailout.” Sen. Elizabeth Warren (D-Mass.) even responded by introducing the “No Bailout for Argentina Act” in Congress, though it has not received a hearing.
This skepticism is understandable, but the loan is not a gift. In fact, it’s a continuation of a long-running series of multilateral financing for successive Argentine governments that the Trump administration hopes will allow President Javier Milei to continue advancing economic liberalization.
On Oct. 9, 2025, U.S. Treasury Secretary Scott Bessent announced that the United States had agreed to a $20 billion currency swap with Argentina’s central bank using available dollars in the Treasury’s Exchange Stabilization Fund (ESF). The ESF is a reserve pool originally created by Congress in 1934 to defend the dollar’s global value, and it held approximately $35 billion in liquid assets prior to the agreement. The treasury secretary holds broad statutory authority to use this fund to purchase foreign currencies and deploy resources in support of U.S. economic and foreign policy interests without any congressional approval needed for particular disbursements.
A currency swap is a type of loan in which the U.S. Treasury, in this case, purchases pesos from Argentina’s central bank in exchange for dollars, providing Buenos Aires with hard-currency reserves it can use to defend its exchange rate, service external obligations, and signal to private investors that the country has a credible monetary backstop. Argentina ultimately must buy its pesos back with dollars to restore the ESF’s position. By late October, Argentina had drawn just $2.5 billion of the available $20 billion. Neither government has publicly disclosed the arrangement’s full terms, including its duration or the interest rate Argentina must pay, a lack of transparency that has drawn legitimate congressional scrutiny.
This swap comes atop a substantial prior multilateral commitment. Earlier in 2025, the International Monetary Fund (IMF)’s executive board approved a 48-month Extended Fund Facility arrangement totaling $20 billion, constituting the IMF’s 23rd loan program to Argentina since 1958. The World Bank and Inter-American Development Bank added another $22 billion in parallel financing. The treasury swap is thus not a standalone intervention but an additional layer of lending capacity aimed at sustaining market confidence in Argentina’s latest iteration of economic reform so that private dollars will flow.
Whether that confidence is warranted begins with an honest accounting of Argentine financial history. The country has defaulted on its sovereign debt nine times, which is more than any other large country. The catastrophic default of 2001 led to a rapid freefall in the value of the peso that wiped out people’s savings, led to banking freezes, and produced five presidential resignations within a period of weeks. Argentina defaulted again in 2014 and 2020. By 2023, it carried the world’s highest inflation rate, and more than half its population lived in poverty. In 1910, Argentina was richer on a per capita basis than France or Germany, but today it has been reduced to a cautionary tale of self-inflicted decline through prolonged government deficits financed by money printing.
It was this accumulated catastrophe that generated the political conditions allowing libertarian economist Milei to become president. A rising generation of young Argentines has never known monetary or economic stability and craves the conditions that lead to opportunity. Pre-election surveys found 68 percent of voters between the ages of 16 and 24 backed Milei. Academics documented the emergence of mejorismo—a generational worldview crystallized through a decade of stagnation, COVID lockdowns, and chronic institutional failure—as a visceral rejection of everything that had come before. This would be expressed in the vocabulary of libertarianism as an ultimate rejection of the collectivist ideology that has dominated the country since the first presidency of Juan Perón and throughout its long period of economic decline.
Milei’s first two years gave his supporters genuine reason for confidence. He converted a fiscal deficit exceeding five percent of GDP into a primary surplus within a single year and reduced monthly inflation from 25.5% in December 2023 to 1.5% by mid-2025. His party then vastly outperformed expectations in the October 2025 midterms, strengthening his congressional hand. As a condition of the April IMF arrangement, Argentina lifted most capital controls and replaced its fixed exchange rate with a managed float—a significant and necessary step toward monetary normalization.
Yet, after nearly a century of economic collectivism, the reforms that would make Argentina genuinely creditworthy on market terms remain incomplete. The most consequential unfinished business is to fix a tax code that punishes entrepreneurship and encourages a shocking share of the country to interact in illicit markets to evade taxation. When considering Argentina’s 155 different tax levies, the combined effective corporate tax burden amounts to more than 106 percent of earnings for the average firm according to World Bank estimates. That’s the highest effective corporate tax rate among all large countries and shows it’s literally impossible to pay all the taxes. This reality has hollowed out the tax base by pushing both firms and individuals underground, with 44.1% of the employed adult workforce indicating they work in unregistered (In American terms, under-the-table) arrangements.
And the managed exchange rate band, while an improvement, is only a half-measure. Milei campaigned on recognizing the U.S. dollar as the official national currency. Informally, dollars are already widely used in Argentina because they are a better store of value than pesos. Argentines hold an estimated $200 to $270 billion in U.S. dollars. Meanwhile, the dollar value of all pesos in circulation is only around $15 billion. Nearly all real estate transactions occur in dollars. The Argentine people want dollars even if, and largely because, the government has used the issuance of new pesos to finance spending it can’t otherwise afford. The market-based alternative to official dollarization is to allow the peso to trade freely without state intervention, but Milei has cautioned that speculators might respond by increasing prices, which would lead to a self-fulfilling fear of renewed inflation.
Ultimately, IMF loans and Treasury swap lines are just credit instruments meant to buy time. If liberalization reforms are sufficiently pervasive, Argentina could become a new global destination for private capital. Billionaire investor Peter Thiel seems to think so, as he recently made headlines by moving to Argentina part-time.
The Trump administration has made a calculated wager on an Argentine government that has demonstrated genuine willingness to absorb political pushback from entrenched interest groups to achieve structural change. But it pays off only if Milei remains committed to—and can secure congressional approval for—an ambitious agenda of liberalization.