Mileis

Argentinian President Javier Milei’s party has pulled off a stunning win in the country’s legislative elections, according to early results, boosting his ability to push forward with his radical overhaul of the economy, including free-market reforms and deep austerity measures.

Milei’s party, La Libertad Avanza, scored 40.84 percent of the votes cast for members of Congress on Sunday, compared with 31.64 percent for the opposition Peronist coalition, early results showed.

The results were based on a count of more than 90 percent of ballots cast.

The midterm elections were the first national test of Milei’s support since he won office two years ago, and will help him maintain the support of United States President Donald Trump, whose administration recently provided Argentina with a hefty financial bailout but has threatened to pull away if the libertarian leader did not do well.

At La Libertad Avanza’s headquarters on Sunday, Milei hailed the party’s victory as a “turning point” for the country and promised to charge ahead with his reforms.

Beaming as his supporters cheered, he seized on the results as evidence that Argentina had turned the page on decades of Peronism that had brought the country infamy for repeatedly defaulting on its sovereign debt.

“The Argentinian people left decadence behind and opted for progress,” Milei said, thanking “all those who supported the ideas of freedom to make Argentina great again”.

Milei’s party triples seat count

In Sunday’s elections, half of the seats in the lower Chamber of Deputies, or 127 seats, and one-third of the upper Senate, or 24 seats, were up for grabs.

Milei said his party has now tripled its seat count, winning 101 seats in the lower house, up from 37, and 20 seats in the Senate, up from six.

The most surprising results of Sunday’s election were in Buenos Aires province, where Milei’s party clawed its way back from defeat in last month’s local elections to run neck-and-neck with the Peronists.

The province has long been a political stronghold for the Peronists, and the win for Milei’s party marked a dramatic political shift.

The strong showing in Sunday’s election ensures Milei will have enough support in Congress to uphold presidential vetoes, prevent an impeachment effort, and see through his ambitious plans for tax and labour reforms in the coming months.

To support Milei, the Trump administration offered a bailout potentially worth $40bn, including a $20bn currency swap, which is already signed, and a proposed $20bn debt investment facility.

Trump has threatened to pull away if his populist ally performed poorly, warning that “if he doesn’t win, we’re not going to waste our time, because you have somebody whose philosophy has no chance of making Argentina great again”.

There was no immediate comment from the White House on Milei’s win.

‘Unobjectionable, unquestionable’

Al Jazeera’s Teresa Bo, reporting from Buenos Aires, said that Trump’s interest in Milei may have influenced the decisions of some of the voters.

“Certainly, the United States played a crucial role in the last stage leading to this election,” she said. “People here listened, and in a way, it may have convinced many to vote for Javier Milei’s party.”

The results were a surprise, she said, “after the president’s party lost by 14 points in the province of Buenos Aires last month to the Peronist opposition after one of the harshest austerity plans in this country’s history”.

Analysts said the stronger-than-expected showing could reflect fear of renewed economic turmoil if the country abandoned Milei’s policies, which, while painful at times, have succeeded in drastically slowing inflation.

Gustavo Cordoba, the director of the Zuban Cordoba polling firm, told the Reuters news agency that he was shocked by the results and thought they reflected public wariness over a possible return to the economic crises of past governments.

“Many people were willing to give the government another chance,” he said. “We’ll see how much time Argentine society gives the Argentine government. But the triumph is unobjectionable, unquestionable.”

Milei, a key ideological ally of Trump who has slashed state spending and liberalised Argentina’s economy after decades of budget deficits and protectionism, had a lot riding on Sunday’s elections.

Milei’s government has been scrambling to avert a currency crisis ever since the defeat by the Peronist opposition in a provincial election last month panicked markets and prompted a selloff in the peso – a move that led to the US Treasury’s extraordinary intervention.

A series of scandals – including bribery allegations against Milei’s powerful sister, Karina Milei – hurt the president’s image as an anticorruption crusader and hit a nerve among voters reeling from his harsh austerity measures.

Although the budget cuts have significantly driven down inflation, from an annual high of 289 percent in April 2024 to just 32 percent last month, many Argentinians are still struggling to make ends meet.

Price rises have outpaced salaries and pensions since Milei cut cost-of-living increases. Households pay more for electricity and public transport since Milei cut subsidies. The unemployment rate is now higher than when the libertarian president took office.

The congressional setback arrives as Milei’s political party faces slumping popularity headed into a midterm election.

Argentina’s struggling President Javier Milei has suffered a new setback as Congress overturned his vetoes of laws increasing funding for public universities and for paediatric care.

On Thursday, senators invalidated both vetoes, which had already been rejected by the Chamber of Deputies, bringing to three the number of laws upheld by Congress despite vehement opposition from the budget-slashing Milei.

Milei, who has implemented deep austerity policies to reduce the size of government, had said the new spending would jeopardise Argentina’s fiscal balance.

The Senate’s vote comes as the United States-backed Milei struggles to end a run on the national currency, the Argentinian peso, in the run-up to the crucial October 26 midterm elections.

The 54-year-old right-winger, in power since December 2023, has been on the ropes since his party’s trouncing by the centre-left in Buenos Aires provincial polls last month.

Those elections, seen as a bellwether ahead of the midterms, shredded his aura of political invincibility and sent markets into a tailspin.

“There’s a sensation of disenchantment and anger with the impact of the cutbacks,” said Sebastian Halperin, a political consultant in Buenos Aires.

He added that Milei had failed to build alliances with governors who influence how their province’s legislators vote in Congress.

Last week, the US government announced it was in talks with Argentina on a $20bn swap line aimed at shoring up the peso.

US President Donald Trump sought to buoy his close ally at talks in New York last week, saying: “He’s doing a fantastic job.”

The two are expected to meet in October as Milei seeks to secure a credit swap line from the US.

Analysts say, however, the president still needs a strong result in the midterms to avoid compromising the progress he has made in steadying Argentina’s economy.

After rallying briefly, the peso slumped again this week over market uncertainty about the amount and extent of the US financial help on offer.

Argentina’s markets have tumbled, with the peso currency at a historic low, after a heavy defeat for President Javier Milei’s party at the hands of the Peronist opposition at local elections stoked worries about the government’s ability to implement its economic reform agenda.

On Monday, the peso was last down almost 5 percent against the US dollar at 1,434 per greenback while the benchmark stock index fell 10.5 percent, and an index of Argentine stocks traded on United States exchanges lost more than 15 percent. Some of the country’s international bonds saw their biggest falls since they began trading in 2020 after a $65bn restructuring deal.

The resounding victory for the Peronists signalled a tough battle for Milei in national midterm elections on October 26, when his party is aiming to secure enough seats to avoid overrides to presidential vetoes.

The government now faces the difficult choice of whether to allow the peso to depreciate ahead of next month’s midterms or spend its foreign exchange reserves to intervene in the FX market, according to Pramol Dhawan, head of EM portfolio management at Pimco.

“Opting for intervention would likely prove counterproductive, as it risks derailing the IMF programme and diminishing the country’s prospects for future market access to refinance external debt,” Dhawan said via email, referring to the International Monetary Fund (IMF). “The more resources the government allocates to defending the currency, the fewer will be available to meet obligations to bondholders — thereby increasing the risk of default.”

He said early indications that the government may double down on the current strategy “would be a strategic misstep”.

The 13-point gap in the Buenos Aires Province (PBA) election in favour of the opposition Peronists was much wider than polls anticipated and what the market had priced in. The government setback at the polls adds to recent headwinds for a market that had until recently outperformed its Latin American peers.

“We had our reservations about the market being too complacent regarding the Buenos Aires election results. The foreign exchange market will undoubtedly be under the spotlight, as any instability there can have a ripple effect on Argentine assets,” said Shamaila Khan, head of fixed income for emerging markets and Asia Pacific at UBS, in response to emailed questions.

“However, it’s important to note that simply using reserves to prop up the currency isn’t likely to provide much reassurance to the market,” she added. “The midterm elections, in my opinion, carry more weight and their outcome will significantly influence how Argentine assets perform in the coming months.”

The bond market selloff saw the country’s 2035 issue fall 6.25 cents, on track for its largest daily drop since its post-restructuring issuance in 2020.

Based on official counts, the Peronists won 47.3 percent of the vote across the province, while the candidate of Milei’s party took 33.7 percent, with 99.98 percent of the votes counted.

Argentina – one of the big reform stories across emerging markets since Milei became president in December 2023 – has seen its markets come under heavy pressure over the last month following a corruption scandal involving Milei’s sister and political gatekeeper Karina Milei where she has been accused of accepting bribes for government contracts..

The government defeat also comes after the IMF approved a $20bn programme in April, of which some $15bn has already been disbursed. The IMF has eagerly backed the reform programme of Milei’s government to the point that its director, Kristalina Georgieva, had to clarify remarks earlier this year in which she invited Argentines to stay the course with the reforms.

The IMF did not respond to questions on whether this vote result would change its relationship with the Milei administration or alter the programme.

Market selloff

Argentina’s main equity index has dropped around 20 percent since the government corruption scandal broke, its international government bonds have sold off, and pressure on the recently unpegged peso has forced authorities to start intervening in the FX market.

“The result was much worse than the market expected – Milei took quite a big beating, so now he has to come up with something,” said Viktor Szabo, portfolio manager at Aberdeen Investments.

Morgan Stanley had warned in the run-up to the vote that the international bonds could fall up to 10 points if a Milei drubbing dented his agenda for radical reform. On Monday, the outcome saw the bank pull its ‘like’ stance on the bonds.

Barclays analyst Ivan Stambulsky pointed to comments from Economy Minister Luis Caputo on Sunday that the country’s FX regime won’t change.

“We’re likely to see strong pressure on the FX and declining reserves as the Ministry of Economy intervenes,” Stambulsky said. “If FX sales persist, markets will likely start wondering what will happen if the economic team is forced to let the currency depreciate before the October mid-terms.”

Some analysts, however, predicted other parts of the country were unlikely to vote as strongly against Milei as in Buenos Aires province given it is a traditional Peronist stronghold.

They also expected the Milei government to stick to its programme of fiscal discipline despite economic woes.

“The Province of Buenos Aires midterm election delivered a very negative result for the Milei administration, casting doubt on its ability to deliver a positive outcome in October’s national vote and risking the reform agenda in the second half of the term,” said JPMorgan in a Sunday client note.

“The policy mix adopted in the coming days and weeks to address elevated political risk will be pivotal in shaping medium-term inflation expectations — and, ultimately, the success of the stabilisation programme.”

Aug. 29 (UPI) — For the first time since taking office, Argentine President Javier Milei’s approval rating has fallen below 40%, according to a recent opinion poll.

The drop is no coincidence. In recent weeks, Milei has faced a series of corruption scandals affecting his inner circle, including his sister, Karina Milei, who serves as secretary general of the presidency and who the president calls “the boss.”

A poll by the Argentine consulting firm Tres Punto Zero, published this week, showed a sharp drop in the president’s approval rating after the scandals. In July, 48% of Argentines viewed his administration positively. However, three weeks later, that number fell to 39.8%, while 57% said they disapprove of his presidency.

The report also found that corruption has become the top concern for Argentines at 44.5%, far ahead of poverty at 16.1% and insecurity at 13.2%.

The results strike at the core of Milei’s campaign promise to end what he calls the “political caste,” a derogatory label he uses for an elite he says lives off and benefits from the state and political system.

Milei’s image has taken a major hit after the leak of audio recordings attributed to his lawyer, Diego Spagnuolo, recorded while he was executive director of the National Disability Agency, in which he allegedly referred to requests for bribes.

The recordings suggest a bribery scheme in the agency’s purchase of medicines, with 8% of contracts allegedly set aside for illicit payments to officials close to the president, including his sister, who also is hit top aide..

The fallout deepened because the leak coincided with Milei’s veto of a law declaring a “disability emergency” — a measure that, among other provisions, would have updated fees and created a non-contributory pension.

While the administration argued the veto stemmed from lack of funding, the opposition called it a budget cut aimed solely at meeting the government’s zero-deficit goal.

In that context, the leaked recordings became ammunition for critics who question the government’s consistency on the issue and fueled tensions in congress and in the streets, to the point that on Wednesday, Milei suspended a campaign event for the upcoming legislative elections in Buenos Aires after protesters threw stones at the presidential motorcade.

“Everything [Spagnuolo] says is a lie. We will take him to court and prove he lied,” Milei told reporters Thursday.

He added that the violence against him comes amid “crude defamatory accusations,” which he said “faithfully reflect the behavior of the caste in a new attempt to stop the process of change the country is undergoing.”

Public opinion analyst Shila Vilker, director of the consulting firm Tres Punto Zero, said the poll results were not surprising, noting that Milei has been embroiled in several controversies that have eroded his image while pursuing fiscal austerity measures that affected parts of the population, including vetoes of benefits for retirees and people with disabilities.

“There has been an overlap of problems. You have the pension veto, tensions over disability, pressure from the rising dollar and higher prices. And now there’s this new chapter, with corruption starting to surface,” she said.

Even so, Vilker stressed, Milei has not lost the trust of his base, as more than 75% of those who voted for him remain convinced of their choice.

“Three out of four are confident in their vote. They have not regretted it,” Vilker said.

Santiago Giorgetta, director of the consulting firm Proyección, said thst “those who support the president are also having a hard time.”

According to a national survey by his firm, only 35% of respondents consider Milei credible, while perceptions of his honesty have dropped to 32%.

He said the turning point in public opinion came in February, when the president promoted on social media the cryptocurrency $Libra, which was later accused of fraud.

“Before that, Milei had all the indicators in the green. After $Libra, they turned red,” Giorgetta said.