The big American banks are asking Argentina for billions of dollars in guarantees to grant them the loan promised by Trump
Donald Trump and Javier Milei. PHOTO: Andrew Leyden/ZUMA / SplashNews.com / Splash / Profimedia
A group of US banks, including JPMorgan Chase, Bank of America and Goldman Sachs, is reluctant to give Argentina a $20 billion loan without direct guarantees or legal commitments from the US government to repay the amount if the government in Buenos Aires is unable to do so, The Wall Street Journal reported on Monday, cited by Reuters.
US Treasury Secretary Scott Bessent said last week that his department was working with banks and investment funds to create a $20 billion financing facility to invest in the sovereign debt of the country led by ultraliberal Javier Milei, an ally of US President Donald Trump.
But the WSJ reports that bankers are awaiting guidance from the Treasury Department on what guarantees Argentina might provide or whether Washington plans to back the mechanism with its own funds.
American banks insist on guarantees to lend Argentina dollars
According to the WSJ, this loan mechanism has not yet been finalized and may not materialize if the issue of collateral required by the banks is not resolved.
“Discussions on this mechanism are ongoing and we expect to provide more details once these negotiations are concluded,” a US Treasury spokesman told Reuters.
Goldman Sachs declined to comment, while JPMorgan Chase, Bank of America and Citigroup did not respond to requests for comment sent by Reuters.
Argentina's Central Bank announced on Monday that it had signed an agreement with the US Treasury Department to stabilize the exchange rate worth $20 billion, bringing total US support to Latin America's third-largest economy to $40 billion. The US Treasury also bought Argentine pesos on the open market.
Conditional US financial support for Argentina
These U.S. support mechanisms also raise the possibility of a conflict between the International Monetary Fund and the Treasury Department, as IMF officials are concerned that the Trump administration could pressure Argentina to prioritize debt to the U.S. over substantial loans from the Fund, according to the WSJ report.
Donald Trump said last week that US support for Argentina depends on the success of President Javier Milea's party in the Oct. 26 legislative election, with the White House leader saying “we will not waste our time [cu Argentina]” if Milei's party won't win.
“I'm on this man's side because his philosophy is right and he could win,” Trump said before a White House lunch with Milei and members of his cabinet.
“He might not win, but I think he will. And if he wins, we'll stay with him. If he doesn't win, we'll go,” Trump said.
