Argentina’s President Javier Milei faced a setback as the Senate approved a pension increase to match the country’s triple-digit inflation rate, going against the president’s tough austerity measures. Milei plans to veto the pension reform, which was passed by a 61-8 vote in the Senate. His allies were unable to negotiate with centrist parties, resulting in only one lawmaker voting against the bill who was from Milei’s party. The bill would require spending an additional 1.2 percent of the GDP, contradicting Milei’s promise to maintain a fiscal surplus at all costs.
Milei, who took office in December, has been focused on implementing austerity measures to combat inflation and rising poverty in Argentina. He has vowed to veto any legislation that undermines his “zero deficit” plan, stating that anything against public accounts will be struck down. With less than 15 percent control of Congress, Milei relies on executive decrees to cut spending and deregulate the economy, facing opposition from leftist and centrist lawmakers in Congress. A recent defeat in Congress has highlighted the president’s struggles to push through his agenda.
Protests against Milei’s agenda have intensified, with clashes erupting between protesters and police following the Senate’s approval of the pension increase. Despite securing a legislative victory with an economic reform bill in June, the pension law’s passage threatened to raise concerns among investors about Milei’s ability to implement his radical agenda. The president has so far managed to achieve a rare fiscal surplus by cutting state spending and halting public works projects, but his executive measures have worsened the recession, increased poverty rates, and fueled inflation.
The impact of the pension reform on Milei’s fiscal programme has raised alarms among investors, with concerns that the president’s confrontational approach may hinder economic stability. With annual inflation soaring to 260 percent and poverty affecting half of the population, critics argue that Milei’s policies have exacerbated the country’s economic challenges. The president’s reliance on executive decrees and struggles in Congress have exposed vulnerabilities in his governance, as he faces pushback from opposition parties and public discontent.
Despite Milei’s efforts to maintain a tough stance on fiscal discipline, the approval of the pension increase reflects challenges in balancing economic stability with social welfare needs. The growing opposition to the president’s austerity measures, coupled with protests and clashes, signal a widening rift between Milei and various groups in Argentine society. As Milei prepares to veto the pension reform, the political landscape in Argentina remains volatile, with uncertainties about the government’s ability to address pressing economic issues.
