Argentina holds midterm elections Sunday that will determine whether President Javier Milei enters the second half of his term bolstered or diminished as economic troubles abound despite unprecedented US aid.
Milei’s Liberty Advances (LLA) party has less than 15 percent of seats in Congress — a share he would like to boost to at least a third, which would offer protection from opposition attempts to thwart his budget-slashing agenda.
A former TV pundit, Milei came to power in December 2023 promising shock therapy for Argentina’s long-ailing economy, revving a chainsaw as a symbol of his plan to slash state spending.
He cut tens of thousands of public sector jobs, froze public works, cut spending on health, education and pensions, and led a major deregulation drive.
Nearly two years of austerity were blamed for initially plunging millions of Argentines deeper into poverty. But the policies did slow inflation by two-thirds, although at a cost of faltering economic growth, consumption and manufacturing.
Economists also warn that a heavily-overvalued peso is damaging Argentina’s competitiveness.
“You cannot fix a hundred years of decline in 20 months,” Milei retorted to critics this week.
– US generosity limited –
Argentines will vote to renew half the 257-member Chamber of Deputies and a third of 72 senators.
Milei’s approval numbers are down and his allies suffered a blistering rejection in bellwether provincial elections in Buenos Aires in September. So it appears unlikely the president’s party will achieve the third of seats he is targeting.
A Milei-friendly majority seems out of the question, pundits say.
This means the LLA would continue to rely on legislative support from center-right allies against the leftist Peronist movement that opposes Milei’s every move.
With only six LLA senators and 37 deputies in hand, the self-declared “anarcho-capitalist” president has already seen many of his signature policies blocked by congress, notably his efforts to privatize major state-owned companies.
With members of Milei’s inner circle implicated in a variety of scandals, adding to his woes, the president received backing this month from an ally, US President Donald Trump, whose administration promised $40 billion in assistance.
But the peso continued to lose ground and monthly inflation has been creeping back up.
Trump upped the stakes last week, making clear the US aid came with conditions.
Ahead of the election, the Republican warned that “if (Milei) loses, we are not going to be generous with Argentina.”
Mauricio Monge, Latin America economist at Oxford Economics, told AFP Washington’s aid “is not enough to counteract the growing likelihood that the election results will prevent further reforms” with voters and investors wary of Milei’s plans.
“If history has taught us anything about Argentina, it’s that previous bailouts, when political support wanes, have proven futile,” he added.
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