Argentina’s lower house on Friday approved President Javier Milei’s sweeping economic overhaul bills, marking a crucial legislative victory for the libertarian leader after six months of contentious debates and vigorous protests that had cast doubts on his governance abilities.
Milei’s landmark legislation, aimed at supporting his “zero fiscal deficit” plan and attracting foreign investment, cleared its final hurdle in the lower house to become law on Friday.
The approval, anticipated following a narrow passage in the Senate earlier this month amid staunch political opposition, bolsters the president’s domestic and international standing amidst mounting economic pressures. Milei’s ascent to power was propelled by promises to lift Argentina from a severe economic crisis that has exacerbated poverty and pushed annual inflation to nearly 300%.
Milei’s administration hailed the passage of the law as setting Argentina “on the path toward the free and prosperous future that Argentines chose” in last November’s election. The government attributed the turbulent process to “obstructionism” by Milei’s hard-line opponents.
With Milei’s party commanding less than 15% of congressional seats, the administration had previously relied on executive powers to cut public spending and implement the president’s radical vision of a smaller state. Analysts noted that only congressional endorsement could provide Milei the backing necessary to instill confidence among investors in Argentina, a nation plagued by a history of defaults and contract breaches.
“This is a significant victory for Javier Milei,” remarked Bruno Gennari, Argentina specialist at KNG Securities, noting a positive impact on bond markets post-vote. “While he had to make substantial compromises to secure his first bill’s passage, the reforms it introduces are still far-reaching.”
The comprehensive state overhaul bill, comprising over 230 articles, comfortably passed the more amenable lower house. The Chamber of Deputies had previously endorsed the legislation’s core in April, forwarding it to the Senate for further deliberation that culminated in a closely contested vote. In the latest session, the Chamber of Deputies conducted a final vote on amendments introduced by senators during their June 13 session.
Early Friday, lawmakers approved the amendments after a marathon 12-hour debate that centered on topics such as extending income tax to one million additional workers and implementing a wealth tax championed by financially strained provincial governors.
The legislative package includes substantial incentives for foreign firms investing over $200 million in Argentina, plans to privatize select state-owned enterprises, and contentious expansions of presidential authority over economic policy.
Critics have particularly scrutinized the incentive program, which the government insists is crucial for eventually removing capital controls but skeptics argue excessively favors foreign corporations with lucrative tax breaks and other advantages.
Despite vehement opposition from influential trade unions, which staged protests outside Congress on Thursday, measures deregulating labor—permitting employers to dismiss workers participating in protests—also passed.
While the law heralds a notable departure from the budget-busting economic model of Argentina’s left-leaning Peronist movement, it has undergone significant dilution from Milei’s initial proposal, which originally encompassed over 600 articles.
Initially intending to privatize more than three dozen state entities including major names like Aerolíneas Argentinas, the national bank, and the state oil firm, Milei secured approval only for the sale of six less prominent public enterprises such as the Buenos Aires sanitation provider.
Milei, who has styled himself as a “mole” aiming to dismantle the state from within and disparaged lawmakers as “rats,” has encountered challenges in garnering political allies. Recently dismissing his inexperienced Cabinet chief, he delegated negotiations with the opposition to Interior Minister Guillermo Francos, a seasoned political operator with extensive ties across political factions.
Indicating plans to capitalize on his momentum by securing additional agreements, Milei announced intentions to convene governors and other influential figures on Argentine Independence Day, July 9, to sign a sweeping national pact endorsing his reforms.
Nevertheless, analysts view the lengthy legislative process, following months of congressional gridlock, as a testament to the polarizing nature of Milei’s agenda.
“Milei managed to push a bill through Congress, but it was a lengthy process,” observed Lucas Romero of Synopsis, a political consultancy. “The time taken underscores the legislative challenges he faces in governing.”
