Top Democrat on Senate committee asks Treasury to end $20 billion swap line to Argentina

WASHINGTON, Feb 5 (Reuters) - U.S. Senator Elizabeth Warren, the top Democrat on the Senate Banking Committee, has asked Treasury Secretary Scott Bessent to end a $20 billion currency swap line with Argentina that Treasury provided last year to stabilize the country's economy.

Warren reminded Bessent in a letter dated Wednesday that Treasury had assured Congress that the currency swap line was intended for "acute, short-term and urgent" needs as a bridge to help Argentine President Javier Milei get through critical October elections and continue his economic reforms.

"Despite Treasury's assertion that its use of the (Exchange Stabilization Fund) was for an 'acute, short-term and urgent' purpose, it appears - by leaving the (exchange stabilization arrangement) in place - to have left open the possibility of continued use of the ESF in Argentina well after the October 2025 elections," Warren wrote in the letter.

Treasury signed the agreement with Argentina shortly before a critical midterm election amid concerns about Argentina's struggling economy. The swap line provided Argentina's central bank with funds that it could use to help prop up the value of the peso and prevent a devaluation ahead of the vote.

The funds were used in October to pay back debt to the International Monetary Fund and to return foreign currency that had been used to support the exchange rate in the days leading up to the election.

Milei, a close ally of U.S. President Donald Trump, succeeded in extending his influence in the country's legislatures.

Warren said Bessent last month told the committee that Argentina had quickly and fully repaid its limited draw on the swap facility, and the Exchange Stabilization Fund did not hold any pesos, but there was no confirmation that it was now closed. She asked Bessent to provide written confirmation of that fact by February 12.

Bessent is due to testify before the Senate Banking Committee on Thursday.