Buenos Aires, Sep 8 (AP) Polls closed Sunday in Argentina’s unusually high-stakes local election for lawmakers in the country’s most populous province of Buenos Aires, voting that is seen as a referendum on the performance of libertarian President Javier Milei and a bellwether for the crucial midterms next month.

The Buenos Aires provincial election is polarised between Milei’s recently formed libertarian party and Peronism, the ideologically flexible populist movement that has held sway in Argentina for decades.

Milei, whose barely 4-year-old La Libertad Avanza party has subsumed much of the centre-right, views this a chance to embarrass the Peronist opposition led by former president Cristina Fernandez de Kirchner in its historic stronghold.

“These elections will be useful to understand the level of support that the government has but also how strong the Peronist party is, especially ahead of the October midterms where the government needs a good result to push its reforms,” Juan Cruz Diaz, the head of Cefeidas Group, a consultancy in Buenos Aires, said.

But the test comes at a tough time.

A bribery scandal has rocked the nation, entangling Milei’s politically powerful sister and undercutting the president’s image as a political outsider pitted against the corrupt Peronist elite.

Milei denies the allegations that his sister took kickbacks from pharmaceutical contracts.

The opposition-dominated Congress has started to turn against Milei’s harsh cuts to social programmes, overriding his veto on raising disability benefits and approving bills that boost scant funding for healthcare and universities.

Adding to the pressure, Argentina’s economy is shrinking, consumer confidence is falling, unemployment is rising and interest rates are soaring to record highs as the government repeatedly intervenes in the currency market to prop up the peso and hold down inflation in hopes of placating cash-strapped voters.

As a result, Milei hasn’t built up enough foreign currency reserves to assure global markets that he can make good on his promise to transform this nine-time serial defaulter into a normal country capable of servicing its debts.

“Milei has a very strong ideology, and his vision is that the state has to have a minimal impact and investments have to come from the private sector. But that hasn’t materialised yet,” Ana Iparraguirre, an Argentine political analyst and partner at Washington-based strategy firm GBAO, said.

Sunday’s vote to elect 69 provincial lawmakers and councilors in dozens of municipalities will not change national policy, nor will it affect the national Congress that holds its midterm elections to renew half of the lower House and a third of the Senate in late October.

But the election will offer foreign investors important clues about whether Milei’s party can gain enough seats in Congress to push through the president’s radical economic overhaul.

Despite the headwinds, Milei has a few assets in his favour: He has fulfilled his flagship campaign pledge to bring down Argentina’s sky-high inflation rate. And his rivals — whose reckless spending helped deliver the crisis that he inherited — are in disarray.

Former president Fernandez, who pulled Peronism to the left during her 2007-2015 tenure and remains its most powerful leader, has been banned from politics for life and placed under house arrest over a corruption conviction.

The party’s future leadership remains uncertain. The movement has struggled to articulate a clear political vision beyond opposition to Milei or economic policy beyond the same patchwork of price controls and cash handouts.

Nonetheless, a sputtering economy and ballooning government corruption scandal has given a jolt of optimism to Peronists in the province where Juan Domingo Peron, the charismatic army general and grandmaster of 20th century Argentine politics, first built his working-class base in the 1940s.

“Right now, people don’t have a lot of options in front of them. They may be disillusioned with Milei. But they don’t know where to go,” Iparraguirre said. (AP) ARI

Argentina stands at a pivotal juncture, balancing the promise of economic stabilization under President Javier Milei’s radical reforms with the uncertainties of political polarization and electoral volatility. For foreign investors, the country’s trajectory hinges on two critical questions: Will Milei’s market-driven agenda endure amid domestic and international headwinds, and can Argentina sustain its recent gains in macroeconomic stability while navigating a deeply divided political landscape?

Economic Reforms and Investor Confidence: A Fragile Stabilization

Since assuming office in December 2023, Milei has pursued an aggressive austerity program, slashing public spending, dismantling subsidies, and liberalizing currency controls. These measures, supported by a $20 billion IMF Extended Fund Facility (EFF) program, have yielded measurable results. By late 2024, Argentina recorded nine consecutive months of fiscal surplus—the first since 2008—while annual inflation plummeted from over 200% in late 2023 to 44.7% in May 2025 [1]. The country’s sovereign risk premium has also narrowed, dropping from 2,500 basis points in August 2023 to 700–800 basis points by early 2025, though it remains among the highest in Latin America [2].

These reforms have attracted cautious optimism from international markets. The IMF’s endorsement of Argentina’s fiscal consolidation—marked by a 5-percentage-point-of-GDP adjustment in 2024—has bolstered investor confidence, enabling the government to access international bond markets for the first time in years [3]. Additionally, deregulation efforts, including the dismantling of federal bureaucracy and daily regulatory rollbacks, have improved market efficiency, drawing interest from foreign firms seeking to capitalize on Argentina’s energy and agro-industrial potential [4].

However, the economic recovery remains uneven. Austerity measures have disproportionately impacted vulnerable populations, with social protection programs like the Universal Child Allowance facing criticism for insufficient coverage [5]. Meanwhile, unemployment and economic contraction in 2025 have fueled public discontent, raising questions about the sustainability of Milei’s approach.

Electoral Risks and Policy Continuity: A Test of Resilience

The 2025 midterm elections, particularly in Buenos Aires Province, will serve as a litmus test for Milei’s political durability. While his La Libertad Avanza party and its ally, PRO, hold a lead in early polls—projected to secure 44% of the vote—challenges loom large. A bribery scandal involving Milei’s sister, Karina Milei, and allegations of corruption within the National Disability Agency (ANDIS) have eroded public trust, with approval ratings slipping to 39% in August 2025 [6].

The opposition, dominated by Peronist factions, remains fragmented. Former president Cristina Fernández de Kirchner’s house arrest has weakened the movement’s cohesion, though its grassroots support persists. Analysts note that while the opposition lacks a unified economic vision, its ability to mobilize anti-Milei sentiment could disrupt policy continuity, particularly if Milei’s coalition loses control of Congress [7].

Milei’s alignment with U.S. President Donald Trump adds another layer of complexity. The administration’s pivot to Washington—including defense partnerships and the relocation of Argentina’s embassy in Israel to Jerusalem—has secured strategic backing but exposed the country to geopolitical risks. A shift in U.S. foreign policy under a future administration could undermine Argentina’s access to critical markets and investment [8].

Institutionalization of Reforms: A Conservative-Libertarian Agenda

Milei’s reforms are not merely economic but ideological. The dismantling of the Ministry of Women, Gender, and Diversity and the proposed removal of femicide as a criminal offense reflect a broader conservative-libertarian agenda [9]. These moves align with a global anti-gender ideology trend, which frames progressive social policies as threats to traditional values. While such policies resonate with Milei’s base, they risk alienating international donors and investors prioritizing ESG (Environmental, Social, and Governance) criteria.

The institutionalization of these reforms, however, remains uncertain. Milei’s reliance on U.S. support and his administration’s internal scandals suggest vulnerabilities. For instance, the override of Milei’s veto on disability benefits by an opposition-dominated Congress highlights the limits of executive power in Argentina’s semi-presidential system [10].

Conclusion: Navigating Opportunity and Risk

For foreign investors, Argentina presents a paradox: a country with significant economic potential but entrenched political and social risks. Milei’s reforms have stabilized inflation and restored fiscal discipline, creating a foundation for long-term growth. Yet, the durability of these gains depends on the administration’s ability to navigate electoral challenges, manage public discontent, and maintain international support.

Investors should monitor three key indicators:

1. Midterm Election Outcomes: A strong showing for Milei’s coalition would signal policy continuity; a Peronist resurgence could trigger a reversal of reforms.

2. IMF Compliance and Debt Sustainability: Argentina’s adherence to IMF conditions and its capacity to service debt will determine access to capital markets.

3. Social and Geopolitical Stability: Escalating protests or shifts in U.S.-Argentina relations could disrupt economic progress.

In this high-stakes environment, patience and agility will be paramount. Argentina’s potential rewards—energy investments, agro-industrial expansion, and a reformed regulatory framework—are substantial, but they come with the caveat that the country’s political and economic crossroads remain deeply uncertain.

Source:

[1] Argentina Overview: Development news, research, data [https://www.worldbank.org/en/country/argentina/overview]

[2] Argentina Inflation Rate: Outlook & Estimate [https://www.focus-economics.com/country-indicator/argentina/inflation/]

[3] OECD Economic Surveys: Argentina 2025 [https://www.oecd.org/en/publications/oecd-economic-surveys-argentina-2025_27dd6e27-en/full-report/macroeconomic-developments-and-policy-challenges_8e6a0236.html]

[4] Deregulation in Argentina: Milei Takes “Deep Chainsaw” to Bureaucracy and Red Tape [https://www.cato.org/free-society/spring-2025/deregulation-argentina-milei-takes-deep-chainsaw-bureaucracy-red-tape]

[5] In Milei’s Argentina ‘economic miracle’, not everyone’s a … [https://www.reuters.com/world/americas/mileis-argentina-economic-miracle-not-everyones-winner-2025-05-05/]

[6] Pressure grows on Milei ahead of Argentina midterm elections [https://www.reuters.com/world/americas/pressure-grows-milei-ahead-argentina-midterm-elections-2025-09-05/]

[7] Argentina’s midterms ‘will be a turning point for Milei’s reform agenda’ [https://www.bnamericas.com/en/interviews/argentinas-midterms-will-be-a-turning-point-for-mileis-reform-agenda]

[8] All in on Trump: Milei’s foreign policy gamble [https://buenosairesherald.com/op-ed/all-in-on-trump-mileis-foreign-policy-gamble]

[9] The New Global Struggle Over Gender, Rights, and Family Values [https://carnegieendowment.org/research/2025/06/the-new-global-struggle-over-gender-rights-and-family-values?lang=en]

[10] Argentina’s largest province holds elections in a political test for President Milei [https://www.whec.com/ap-top-news/argentinas-largest-province-holds-elections-in-a-political-test-for-president-milei/]

Gerald William Richards, 79 Oct. 1, 1945 ~ June 13 Gerald William Richards, 79 Oct. 1, 1945 ~ June 13 Mr. Gerald William Richards, 79, of Cookeville, passed away at his residence surrounded by his family Friday, June 13, in Cookeville. Gerald was …

Nelda Sue Looper, 84 June 15, 1941 ~ June 12 Nelda Sue Looper, 84 June 15, 1941 ~ June 12 Ms. Nelda Sue Looper, 84, of Cookeville, passed away Thursday, June 12, at the Cookeville Regional Hospital in Cookeville. Nelda was born Sunday, June 15, …

Allie D Lois Neely, 82 March 2, 1943 ~ June 15 Allie D Lois Neely, 82 March 2, 1943 ~ June 15 Mrs. Allie D Lois Neely, 82, of Cookeville, passed away at Cookeville Regional Hospital in Cookeville Sunday, June 15. She was born Tuesday, March 2, …

Wanda Gene Oakley Boswell, 78 Jan. 27, 1949 ~ June 13 Wanda Gene Oakley Boswell, 78 Jan. 27, 1949 ~ June 13 Mrs. Wanda Gene Oakley Boswell, 78, of the Allred Community of Overton Co., passed away on Friday, June 13, at the Vanderbilt Medical Center in …