Introduction
Argentina's President Javier Milei is implementing a stringent austerity plan to curb rampant inflation as he seeks to consolidate his power ahead of the upcoming legislative elections in October.Context
Milei, known for his unorthodox style and close ties to U.S. political figures, has managed to establish a stable dollar-peso peg while navigating the complexities of Congress with the help of legislative allies. Many of his reforms have been enacted through presidential decrees, mirroring tactics used by former U.S. President Donald Trump, who has labeled Milei his favorite president. The elections on October 26 will see voters select nearly half of the lower chamber seats and a third of the upper Senate. While a significant win for Milei may not secure a legislative majority, it would enhance his ability to pursue his agenda, including privatizing state-owned companies and modifying social and tax policies.Developments
Milei’s austerity measures stand in stark contrast to the policies of the Peronist parties, which have historically focused on nationalization and social welfare. Although his economic policies have brought a degree of stability—reducing inflation to a projected 30% from 118% the previous year—many citizens are still grappling with high living costs, particularly for basic necessities, leaving nearly 40% of the population in poverty. This economic strain has sparked protests, especially among pensioners and healthcare workers.Public sentiment is shifting, with some expressing support for Milei despite their reservations about his policies. For instance, a cardboard collector indicated that he would vote for the Peronists to avoid supporting Milei. The potential need for tighter economic policies to comply with the terms of a $20 billion International Monetary Fund loan could further complicate Milei's standing in the eyes of voters.
In the politically crucial province surrounding Buenos Aires, Milei has gained traction, with recent election results showing his candidate coming in first in local contests. Current polling indicates that his party, Libertad Avanza, holds a narrow lead against the center-left Peronists. Nationally, Milei commands 42% support compared to the Peronists' 23%, suggesting a significant shift in public opinion that could further empower his agenda.
Another factor benefiting Milei is the internal strife within the Peronist ranks, particularly between Governor Axel Kicillof and former President Cristina Fernandez de Kirchner. Kicillof’s potential candidacy for the presidency in 2027 adds another layer of complexity to the upcoming elections, as the Peronists face challenges in unifying their strategy. Milei’s coalition efforts with the center-right PRO party may position him favorably as he seeks to capitalize on Peronist divisions.