Where the US got $20B to bail out Argentina

Summary of Where the US got $20B to bail out Argentina

by NPR

9m•November 13, 2025
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Overview of Where the US got $20B to bail out Argentina

This episode of The Indicator from Planet Money (hosts Stephen Massaha and Waylon Wong) explains how the U.S. quickly provided Argentina a $20 billion swap line during a recent peso crisis — and where that money actually came from. The piece traces the history and purpose of the Exchange Stabilization Fund (ESF), describes prior uses of the fund, explains what makes the Argentina action unusual, and outlines political and financial concerns about the bailout.

What is the Exchange Stabilization Fund (ESF)?

  • Created in 1934 under FDR with an initial $2 billion allocation.
  • Administered by the Treasury Department.
  • Originally intended to stabilize the U.S. dollar by buying and selling gold and foreign currencies during volatile periods.
  • Today the ESF holds foreign currencies and IMF special drawing rights (SDRs) and earns income from investments; profits are returned to the fund.
  • The ESF can be used by the Treasury without new Congressional authorization in some circumstances.

How ESF market intervention works

  • Simple mechanism: Treasury can sell a foreign currency it holds (e.g., Swiss francs) and buy U.S. dollars on FX markets to prop up the dollar; the opposite moves can weaken the dollar.
  • That market-stabilization role faded as the dollar became the dominant global reserve currency; the ESF’s mandate language about stabilizing the dollar was removed in the 1970s.

Historical uses of the ESF

  • 1995 Mexico bailout: The U.S. used $20 billion from the ESF (in coordination with other countries) to stabilize Mexico during a peso crisis — a politically and economically systemic case tied to NAFTA.
  • 2008 financial crisis: ESF-backed actions included guarantees for certain investment funds.
  • Early COVID-19 pandemic: ESF-backed measures helped backstop some loans to banks.
  • The ESF has also been used to hold IMF SDRs and for other international financial interventions.

What happened with Argentina — the $20B swap line

  • In response to a sharp fall in the Argentine peso, the U.S. extended a $20 billion swap line to Argentina (essentially a short-term liquidity backstop).
  • The move was executed using the ESF — the same Treasury “cookie jar” used in prior crises.
  • Unlike the 1995 Mexico case, this Argentina package appears to be a unilateral U.S. action (no coordinated international package publicly reported).
  • Treasury Secretary Scott Bessent (transcript spells variant) commented that a follow-up $20B package could be assembled from private banks and sovereign wealth funds.

Why the U.S. acted

  • Political ties: President Trump (as referenced in the episode) personally favors Argentina’s leader, Javier Milei.
  • Geopolitical and economic interests: Argentina’s natural resources (natural gas, lithium) and desire to limit Chinese influence in Latin America.
  • Financial interests: Media reported that some former colleagues of Treasury officials have investments linked to Argentina, raising questions about potential conflicts (Treasury denies this characterization).

Concerns, controversies, and risks

  • Unprecedented unilateral use: The Argentina swap line differs from past ESF deployments because it’s not clearly coordinated with the IMF or other nations.
  • Lack of public conditions: The Treasury has not disclosed the specific conditions or terms attached to the $20B; experts worry this lacks transparency and accountability.
  • Moral hazard and follow-up risk: Economists warn that providing this lifeline could commit the U.S. to further assistance if Argentina relapses into crisis.
  • Limited systemic spillover: Argentina’s repeated defaults and chronic instability mean its crisis is less likely to directly destabilize neighboring countries or the U.S. financial system — yet that isolation raises questions about U.S. motives.
  • Potential conflict-of-interest concerns because of private ties between Treasury figures and Argentine investments.

Key takeaways

  • The $20B came from the Exchange Stabilization Fund, a nearly 90-year-old Treasury-managed fund originally created to stabilize the dollar but now used for broader emergency and international finance purposes.
  • This ESF deployment for Argentina is notable for being unilateral, relatively opaque, and potentially precedent-setting.
  • Main rationales given: political alignment, strategic resources, and countering China's regional influence — but questions remain around transparency, oversight, and conflicts of interest.
  • Watch next steps: whether the Treasury releases terms/conditions, whether private financing Bessent mentioned materializes, and whether Congress or watchdogs increase scrutiny.

Notable quotes from the episode:

  • President Trump (to a reporter on Air Force One): "They're fighting for their life. You understand what that means? They have no money. They have no anything. They're fighting so hard to survive."
  • Historical reference (1995 Clinton administration): the U.S. used ESF authority to deliver a $20B package to stabilize Mexico — an earlier precedent for rapid ESF use.