After several rounds of announcements, the currency swap between Argentina and the United States has finally been confirmed by the authorities of both countries. That means the US$20 billion support line is now officially available to President Javier Milei and Argentina.

U.S. President Donald Trump’s decision to dedicate such a huge support package to Argentina has been widely interpreted as a bailout, criticized by Republicans and Democrats alike for failing to prioritize the needs of the U.S.’s own citizens. 

But the swap line is not the same as traditional development aid spending. Here’s how a currency swap works — and the key questions to ask about the deal. 

A currency swap is when two countries agree to exchange sums of their currencies. Once the swap is agreed, the country has to “activate” the swap to draw on the funds. When it receives the money, it can use it freely, although it is typically spent on imports from the other country in the deal, or to pay debt. 

President Milei has explained the agreement, saying: “We have US$20 billion of credit, and they have credit equal to that number in pesos. It is only activated when needed.”

This means the U.S. Treasury commits to deposit the money in Argentina’s Central Bank, and Argentina does the same with pesos — but they don’t actually make the payments until the swap is activated. 

The swap becomes active when one of the countries decides to use the money. Once that happens, it becomes part of the country’s international reserves.

The country activating the swap does not necessarily activate the full amount in one go.

A currency swap is not the same as development aid spending, in which wealthy countries provide assistance to developing countries. Aid spending is typically coordinated through a national aid or development institution, such as the United States Agency for International Development (USAID). Trump has made huge cuts to USAID since taking office in January. 

Despite this distinction, Bessent

© Buenos Aires Herald