He defied the forecasts of pollsters and financial markets. Javier Milei obtained an important electoral victory this Sunday, October 26. His party, La Libertad Avanza (LLA), obtained nearly 41% of the votes and pushed the Peronist opposition to 32%, without obtaining, however, an absolute majority, during midterm elections marked by historically low participation (68%). However, voting is mandatory in the country.
The Argentine president promised to “advance along the reformist path” and seemed to reach out to part of the opposition, indicating “that there are dozens of deputies and senators with whom we can reach basic agreements” on the reforms. The latter had put down his chainsaw a bit after the triumphalism of the first months. His shock therapy, based on a drastic reduction in public spending and an adjustment of the exchange rate, had allowed inflation to be reduced very significantly (from more than 200% at the end of 2023 to 32% in September 2025) while generating a budget surplus.
Threat to weight
But the situation has deteriorated this year, particularly since an electoral defeat in the Buenos Aires provincial elections in mid-September. Investors and households began to doubt the strong peso policy implemented to “exterminate inflation.” While worried investors sold their pesos for dollars, the Argentine currency depreciated 13% in a few days, far exceeding the 2% monthly limit set by the Argentine president following the massive devaluation implemented shortly after he came to power in December 2023. This situation required the intervention of the United States. Donald Trump has promised huge financial support, up to $40 billion, to save one of his few allies on the South American continent.
The latest electoral success could give Javier Milei a break, while markets and international institutions such as the IMF will be very attentive to the evolution of the country’s currency reserves. The executive intends to resume its cycle of liberal reforms, prioritizing work and taxation, according to the newspaper The Nation. The pension reform would be postponed until later. The labor reform aims in particular to implement “dynamic wages”, that is, to completely dismantle the current system. The minimum wages provided for in collective agreements would become maximums and indexation to inflation would be abandoned. According to La Nación, the tax reform project aims to reduce VAT and income tax.
More than 200,000 jobs, both public and private, were lost during the ultraliberal president’s two years of budgetary austerity with the construction sector on the front line, through the freezing of public works. These job losses and anemic economic activity have prevented most Argentines from feeling the benefits of controlled inflation.
Source: BFM TV
