The U.S. may have transferred over $800 million of its IMF reserves to Argentina, in a transaction that occurred just before a crucial debt payment.
Argentina Taps US Swap to Repay IMF?
The U.S. Treasury’s “special drawing rights” (SDRs) at the IMF, which can be used to pay off debts or exchanged for other currencies, decreased by $870 million last month. This aligned with a similar rise in Argentina's SDR account, occurring just before the country was scheduled to make an $840 million payment to the IMF on Nov. 1, according to official data from the IMF.
It is not confirmed that Argentina's higher SDR holdings resulted from drawing on its U.S. swap line, and the usage of the swap funds or their purpose remains unclear. Treasury Secretary Scott Bessent said on MSNBC on Tuesday that Argentina's government had used a "small amount" of the currency swap line agreed upon last month.
Meanwhile, economist Gabriel Caamaño of Outlier told the Financial Times that Argentina is estimated to have tapped about $2.7 billion from its currency swap line—likely using part of it to repay the IMF—though he noted the Argentine government has not disclosed any details about the transactions.
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Trump’s ‘America First’ Goal Questioned
The U.S. has been aiding Argentina through a $20 billion currency swap deal and market interventions aimed at stabilizing the peso. The program has faced criticism at home for allegedly exposing U.S. taxpayer money to risk.
Bessent defended the $20 billion emergency support for Argentina, stating that it was a profitable swap line, not a bailout. The arrangement allows Argentina’s central bank to exchange pesos for U.S. dollars. He also claimed that the U.S. “made money” by backing Argentina’s central bank ahead of last month’s midterm elections, which President Javier Milei won.
This move, which contradicted Trump’s “America First” mantra, was seen as a bid to stabilize an ally in Latin America. Notably, the U.S. has repeatedly used currency swap lines to stabilize global markets, during the 2008 financial crisis, the 2011 European debt crisis, and the 2020 pandemic, by providing dollar liquidity to foreign central banks and preventing financial contagion.
Besides the $20 billion swap line with the Treasury Department, Argentina’s rescue package also includes a separate $20 billion bank-led debt facility.
Sen. Elizabeth Warren (D-Mass.) criticized the Trump administration, arguing that the $40 billion bailout for Argentina favors Wall Street investors over American families struggling with healthcare, childcare, and food assistance.
Price Action: Argentina-focused ETF, Global X MSCI Argentina ETF (NYSE:ARGT) climbed 5.72% on a year-to-date basis while iShares MSCI Emerging Index Fund (NYSE:EEM) climbed 33.09% during the same period, as per data from Benzinga Pro.
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