Woes mount for Milei in Argentina
On 17 September Argentina’s central bank (BCRA) intervened to prop up the peso, as the lower chamber rejected more of President Javier Milei’s vetoes and anti-government protesters took to the streets, reflecting the mounting challenges facing the Milei administration ahead of October’s mid-term elections.
Analysis:
Milei is facing falling approval ratings and weakening political capital as he struggles to deal with the fallout from a corruption scandal implicating his sister and most trusted adviser, Karina Milei, and a chastening loss in key elections in Buenos Aires province earlier this month. The political uncertainty has spooked the markets, causing the peso to tumble and necessitating the BCRA’s first direct intervention in the currency market since April, when Milei lifted longstanding currency restrictions and let the peso float freely within a band. All this has prompted Milei to change tack in recent days, with a notable diluting of his normally fiery rhetoric and apparent concessions in relation to spending in healthcare, education, and pensions included in his 2026 budget proposal. This seems to be too little, too late, as protesters took to the streets to denounce presidential vetoes against university financing and paediatric healthcare bills yesterday, precipitating a vote in the lower chamber to reverse both vetoes.
The peso breached the upper limit of the government’s exchange rate band, currently around Ar$1,475/US$1 yesterday for the first time since the new system was implemented in April as part of Argentina’s new agreement with the International Monetary Fund (IMF). This prompted the BCRA to intervene, selling off US$53m of its international reserves.
This came as yesterday the lower chamber voted to reverse two presidential vetoes, one of a bill boosting funding for public universities and another increasing funding for paediatric healthcare. The vetoes were rejected by 174 to 67 with two abstentions and 181 to 60 with one abstention respectively.
The vote took place as tens of thousands protested in support of public universities and the health sector in the city of Buenos Aires. The demonstrations comprised healthcare workers, the university community, unions including the powerful Confederación General del Trabajo (CGT) umbrella trade union, social movements, and political organisations.
In a statement, the prestigious public university Universidad de Buenos Aires (UBA) said that more than 800,000 people had taken part in the protests. UBA recognised the vote in the lower chamber, saying it hoped it sent “a forceful message” to senators, who will be next to vote on the vetoes.
Axel Kicillof, the Peronist governor of Buenos Aires province, also took part in the protests, posting on social media that: “The people are standing up and, in large numbers, have once again told Milei that universities are not for sale, hospitals should not be defunded, and rights are not negotiable.”
Kicillof and the opposition Peronist Fuerza Patria alliance more widely have been buoyed by the result in Buenos Aires. A recent poll conducted by AtlasIntel for Bloomberg showed that while Milei’s LLA is still projected to win the October mid-terms, its estimated lead ahead of the Fuerza Patria has reduced by half since July. According to the survey, in July, 38.7% of respondents said they would vote for the LLA versus 27.5% for the Peronist coalition, while in September this narrowed to 39.8% and 35.6%.
The same survey shows a sustained rise in Milei’s disapproval rate too. In June, the president’s approval and disapproval ratings were tied at 44.1% each while in September, his disapproval rating rose to 53.7% and his approval rating languished behind on 42.4%.
Looking Ahead: Senators will vote on whether to also reverse and therefore strike down the vetoes in the coming days.