Background on Javier Milei and His Government
Javier Milei, an ultraliberal president of Argentina, has governed with two-year budgets until now. His first comprehensive budget for 2026 was recently approved by the Argentine Congress after a lengthy debate, signaling strong support for his administration.
Budget Approval Details
The Argentine Senate approved Milei’s budget proposal following the backing of the lower house. The final vote was 46 in favor, 25 against, and one abstention after more than eight hours of debate. The new law outlines a 10.1% inflation target, a 5% GDP growth projection for the upcoming year, and reaffirms the government’s commitment to fiscal balance.
Controversial Aspects of the Budget
A contentious section of the budget eliminates funding minimums for education, science, and defense, imposing stricter administrative requirements for universities to access funds. Critics, like opposition senator José Mayans, argue that this will severely impact education and represents the government’s “descent into corruption” due to the expedited treatment.
Support for Milei’s Budget
Despite criticism, the ruling party’s senator Patricia Bullrich defended Milei’s budget, stating that they are not cutting from the most vulnerable but rather promoting liberty. Milei has governed with extended 2023 budgets despite the inflationary impact on sectors like science, healthcare, and education.
Implications for Argentina’s Economy
Political scientist Carlos Fara explained to AFP that Milei’s budget demonstrates a “path of normality” to investors and markets, showing how electoral success translates into better governance. The government needs to prove its management capabilities, especially to creditors like the International Monetary Fund (IMF), where Argentina is the largest debtor.
Future Reforms and Challenges
With a stronger parliamentary majority following his October electoral victory and agreements with governors from other parties, Milei aims to implement a series of reforms in the next two years. The sensitive labor reform, which sparked union rejection and protests, has been postponed until February. The government also plans to introduce tax and pension initiatives in the coming months.
Key Questions and Answers
- What is the significance of this budget approval? The approval signifies strong support for Milei’s ultraliberal administration and demonstrates his government’s commitment to fiscal balance.
- What are the controversial aspects of Milei’s budget? The budget eliminates funding minimums for education, science, and defense, imposing stricter administrative requirements on universities. Critics argue this will severely impact education.
- Why is this budget approval important for Argentina’s economy? The approval shows a “path of normality” to investors and markets, which is crucial for Argentina’s relationship with international creditors like the IMF.
- What reforms does Milei plan to implement? Milei aims to introduce a series of reforms, including labor, tax, and pension initiatives, in the next two years.
