The US has stepped in as the lender of last resort in an attempt to stabilise Argentina’s imploding finances and bail out a president who is a friend and ideological ally of Donald Trump.

Unexpected defeats in local elections earlier this month – fuelled by a voter backlash against Javier Milei’s austerity regime and allegations of corruption involving his sister – triggered a share selloff of Argentina’s currency, US dollar-denominated bonds and Argentinian shares, with investors fearing Milei’s radical economic reforms could stall if the outcome of next month’s midterm congressional elections is unfavourable.

Javier Milei has built a close personal relationship with Trump and his US administration and Trump’s conservative billionaire supporters.Credit: Aresna Villaneuva

Milei is a libertarian and fiscal conservative who, before Elon Musk, wielded a chainsaw during his presidential campaign in 2023 to foreshadow his assault on Argentina’s bloated bureaucracy and the government’s oversized role in the economy.

He has built a close personal relationship with Trump and his US administration as well as Trump’s conservative billionaire supporters.

Milei’s approach – slashing government spending, removing state subsidies, privatising state-owned companies and repealing price controls – appealed to the fiscal conservatives in America, some of whom bet on him being successful by investing in Argentina and its dollar-denominated debt.

Those relationships have paid off, with Trump, who described Milei has a “truly fantastic and powerful leader” in a social media post on Wednesday, riding to his rescue.

US Treasury Secretary Scott Bessent announced the Treasury was negotiating a $US20 billion ($30.4 billion) swap facility with their Argentinian counterparts, that the US was ready to buy Argentina’s US dollar bonds and that it was prepared to deliver “significant” stand-by credit from its Exchange Stabilisation Fund. It was also prepared to buy secondary or primary government........

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