The Argentine President Javier Milei is facing his first major political test in the upcoming midterm legislative elections. These elections, which renew half of the Chamber of Deputies and a third of the Senate represent the most significant challenge to the survival of his radical austerity program and his ability to govern effectively. With a fragile economy and a highly personalised international financial agreement hanging in the balance, the outcome will be decisive for Argentina’s short-term future.
The legislative stakes: how will it impact Milei’s powers
Since his inauguration in December 2023, Milei’s agenda, centred on deep public spending cuts, fiscal balance and economic liberalisation, has been repeatedly stalled by a hostile congress. His party, La Libertad Avanza (Advancing Liberty), holds only a limited number of seats, forcing him to rely on alliances and executive actions, which has often been overruled.
Milei’s primary objective is to secure at least a one-third minority in both legislative chambers. This is the critical threshold that would enable his bloc to sustain presidential vetoes and block major opposition bills. Without this power, the opposition can easily pass legislation designed to increase spending, potentially derailing the government’s entire fiscal adjustment program and its hard-won progress against triple-digit inflation.
Image: President of Argentina Javier Milei – Milken Institute
The elections function as a national referendum on the cost and sustainability of Milei’s “shock therapy”. While the government has celebrated a reduction in the inflation rate, the austerity measures, including significant reductions in state subsidies, cuts to public works, and job losses, have generated widespread discontent. The vote will be the clearest indicator of whether the electorate is prepared to continue absorbing economic hardship in pursuit of Milei’s long-term economic vision.
For both domestic and international investors, the election result is a key signal of the government’s stability and longevity. A strong result is essential to shore up investor confidence and stabilise the financial markets, which remain volatile. However, a weak showing would exacerbate uncertainty regarding Milei’s capacity to implement further structural reforms, potentially leading to capital flight and increased market pressure on the peso.
Milei’s choices ahead of the 2027 election
If Milei gains ground, a favourable outcome for La Libertad Avanza would likely prompt Trump to intensify US financial backing and public support. This reinforcement would serve as a powerful external validator for Milei’s policies, providing a substantial psychological and material tailwind for the administration.
Should the result be disappointing, Trump’s explicit warning that the US would “not waste time” with Argentina could translate into a freezing or withdrawal of financial commitments. Such a development would be catastrophic for market confidence, potentially triggering a financial crisis as a weakened government loses its most significant international backer.
Image: President of Argentina Javier Milei at the US Embassy in Buenos Aires – US Embassy in Argentina
The relationship symbolises a broader trend of ideologically driven foreign policy. Trump views Milei as a key figure in the global populist and libertarian movement, and the US financial commitment is a strategic move to underwrite the stability of this political alliance in the region.
The Argentine midterms are a pivotal moment that will determine the immediate trajectory of the nation. The election is a straightforward test: can President Milei translate popular frustration into a sustainable legislative base? A positive result would solidify his mandate, enabling him to push ahead with a reform agenda and secure essential international financial support. A negative result, however, risks crippling his ability to govern and could usher in a renewed period of political and economic instability, complicated by the real threat of losing the conditional financial lifeline extended by the Trump administration.
Featured Image via Gage Skidmore – Flickr
