US banks have shelved a headline $20 billion bailout facility for Argentina and are instead working on a far smaller, short-term repo package of around $5 billion, sharply reducing the scale of private financing attached to Washington’s support for President Javier Milei.
In October, the US Treasury reached a $20 billion exchange-rate stabilization agreement with Argentina that was meant to be paired with a matching $20 billion bank-led debt facility, according to the Wall Street Journal as cited by Reuters. The twin structure would have combined official support with a large private loan just days before a midterm election seen as crucial for Milei’s libertarian reform agenda.
Bankers now say that the $20 billion debt facility is no longer under serious consideration, the Journal reported. Instead, lenders led by JPMorgan Chase, Bank of America, and Citigroup are pivoting to a roughly $5 billion short-term repurchase, or “repo,” line, cutting the notional scale of the private package to about one quarter of the original plan.
The proposed repo structure would direct most of the funds to an immediate hard obligation. According to the report, the money is intended to help Argentina meet a roughly $4 billion debt payment due in January, giving Milei’s government a focused liquidity bridge rather than the broader balance-of-payments backstop implied in the shelved $20 billion facility. Talks on the repo are still in initial stages and could change or fall through.
President Donald Trump and Treasury Secretary Scott Bessent have been described as staunch backers of Milei, providing a political backdrop for the Treasury’s $20 billion commitment. The banks’ decision to shelve the matching $20 billion facility while exploring a smaller repo line suggests that private lenders are calibrating their exposure more cautiously, even as Washington continues to signal strong alignment with Argentina’s libertarian government.
The shift comes after the political urgency that surrounded the October agreement has eased. The original pairing of a $20 billion Treasury stabilization line with a $20 billion bank loan was struck days before a midterm vote that was crucial for Milei, giving markets a signal of both Washington’s and Wall Street’s readiness to back his program. With the election now over, the emerging $5 billion repo structure points to a narrower objective centered on near-term debt-service coverage rather than a large, open-ended bet on Argentina’s broader adjustment path.
Milei’s administration has been steadily bringing inflation down from triple-digit year-over-year rises, but the country’s reserves are tight and the government was rapidly burning through dollars before US backing was arranged, according to the Journal account.
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