This week’s US financial support for Argentina has increased speculation that the South American country may seek additional assistance from the International Monetary Fund (IMF), despite already receiving unprecedented sums from the fund, according to analysts.
US Treasury Secretary Scott Bessent on Wednesday announced a $20 billion swap line to the government of President Javier Milei and pledged to purchase Argentine bonds. The move, part of the Trump administration’s effort to support its ideological ally, temporarily halted a sharp sell-off in Argentine markets triggered by Milei’s rapid depletion of the country’s foreign reserves in an effort to defend an overvalued currency.
However, experts warn the package may worsen Argentina’s debt burden just four months after the latest IMF bailout, complicating repayment to creditors. “If Argentina actually has to use any significant part of this credit line, there is no clear path to payment for the US other than more IMF money,” said Brad Setser, senior fellow at the Council on Foreign Relations, as reported by the Financial Times.
Argentina’s gross foreign exchange reserves currently stand at $39 billion, lower than in 2018, despite large-scale IMF lending since then. Under Milei, the reserves have remained under pressure even after the fund advanced more than half of a fresh $20 billion bailout upfront. Analysts note that fully utilizing US support would immediately confront repayment challenges.
Stephen Paduano, a postdoctoral fellow at Oxford University’s Blavatnik School of Government, said, “There is an arithmetic problem here — there is only $5 billion to $6 billion left from the IMF to go out under its current programme to support the $20 billion swap line if it were drawn.”
The IMF’s overall forward commitment capacity, the fund’s measure of lending firepower, stands at $222 billion, and any further support for Argentina would first require approval from the fund’s board. While the IMF’s risk of losses remains low, experts caution that the likelihood Argentina can repay its debt in a reasonable timeframe has declined due to weak dollar reserves.
The US intervention has provided short-term relief for Argentine dollar bonds, which plunged earlier this month before rebounding following the announcement of support. Nevertheless, the increasing share of official loans may reduce recoveries for private creditors if Argentina ultimately restructures its debt.
“US support buys time,” said Carlos de Sousa, portfolio manager at Vontobel. “At the pace of intervention they were doing last week, they could have run out of reserves even before the elections.”
Bessent indicated that the US plans to work with Argentina on bond repayments immediately after October’s elections. Analysts warn that while the short-term market boost is clear, long-term debt sustainability questions remain unresolved.
The report highlights concerns that US and IMF interventions, while stabilizing markets temporarily, could deepen Argentina’s dependence on external financing and complicate repayment prospects—a challenge that has echoed through successive administrations.
