The Senate in Argentina has passed a pension increase bill in defiance of President Javier Milei, matching the country’s triple-digit inflation rate. Milei is set to veto the reform, which would widen the rift between him and the opposition-controlled Congress. The bill passed with a 61-8 vote in the Senate, with most of the opposition votes coming from Milei’s party. Lawmakers could override the veto with a two-thirds majority. Milei has committed to maintaining a fiscal surplus at all costs and has promised to strike down any legislation that undermines his austerity measures.
Milei, who took office in December, has implemented strict austerity measures to combat inflation and rising poverty in Argentina. He has faced challenges in Congress, where his party has limited representation. The president has relied on executive decrees to slash spending and deregulate the economy. His attempts to increase the intelligence budget were rejected by Congress, which argued the funds could be better used for social needs. The recent pension law passing against his wishes further underscores his weakness in Congress.
Despite securing some legislative victories, Milei’s radical agenda faces opposition from protesters and investors who are uncertain about his ability to implement his policies. The pension law, which includes an 8 percent increase in retirement benefits, could impact Milei’s fiscal programme. The president has achieved a rare fiscal surplus by cutting spending, halting public works projects, and reducing revenue transfers to provinces. However, these measures have deepened a recession, increased poverty levels, and led to a sharp rise in inflation.
Milei’s office criticized the pension reform bill as an attempt to undermine the government’s economic programme, as it would require additional spending equivalent to 1.2 percent of GDP. The president has vowed to maintain a zero deficit plan and veto any legislation that goes against it. Despite facing opposition in Congress, he remains committed to his austerity measures. The rejection of the pension law by the Senate signals a setback for Milei’s agenda and highlights the challenges he faces in passing legislation.
The passing of the pension reform bill has reignited concerns among investors about Milei’s ability to govern and implement his economic policies. His confrontational approach and reliance on executive decrees have raised doubts about the sustainability of his fiscal programme. The president’s inner circle, known for their hardline stance, has faced criticism for leading the country into a negative economic streak. As Argentina grapples with high inflation, rising poverty, and a deepening recession, the outcome of the pension law dispute will have significant implications for Milei’s administration and the country’s economic future.
