Argentina’s Senate hands Javier Milei a win as it approves budget

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Argentina’s Senate approved President Javier Milei’s 2026 budget by a broad margin late on Friday, handing a victory to the libertarian’s administration in its first big congressional test since his party’s success in the October midterm elections.

Senators backed the bill by a vote of 46-25, with one abstention, marking the first time Milei will govern with a budget of his own after relying on rolled-over spending plans amid deep political fragmentation since he took office in December 2023.

Milei’s allies, however, failed to overturn spending increases on disability payments and university funding that had previously been approved by lawmakers.

The outcome underscores that despite Milei’s growing leverage in Congress, he remains limited by the need to negotiate with opposition blocs to advance his programme. The president has relied heavily on executive decrees to push through his sweeping austerity agenda aimed at slashing spending and restoring fiscal balance.

“The priority was passing the bill, not just for the general public but to show the markets that the political power behind Milei has changed since the election and that he can now get laws through Congress,” said Lucas Romero, who leads Synopsis, a Buenos Aires-based consultancy.

Among the most controversial measures in the budget were provisions scrapping minimum funding thresholds for education and science spending, as well as new conditions imposed on financing for public universities.

Any changes to the bill would have sent it back to the lower house, a scenario the government and its allies were keen to avoid as they sought to secure a clear legislative victory before the end of the year.

The administration had already suffered a setback in the lower house, where the budget was approved earlier this month by 132 votes to 97, with 19 abstentions, but lawmakers rejected a chapter of the bill that would have reversed recent spending increases.

Government officials had warned shortly after passage that Milei could veto the budget without that section, although he later dismissed that possibility in a television interview.

“I will not veto the budget law,” Milei said on Sunday. “What we will do is adjust spending allocations to meet the zero-deficit target, which is the most important policy.”

The budget advances Milei’s efforts to cut spending with almost all ministries facing real-term reductions next year. It targets a primary surplus of 1.2 per cent of GDP and assumes annual inflation of 10.1 per cent, down sharply from 31.4 per cent in November, year-on-year.

For investors, the passage of the budget offers reassurance that Milei will be able to deliver on his market-friendly reform agenda, though questions remain about whether the government can sustain its legislative ambitions. The administration had previously said it wanted to push a broad labour reform bill through Congress before the end of the year but has postponed that debate until February.

“The government needed to show the markets and institutions that electoral support can be turned into governability,” said Mariel Fornoni, a political analyst who runs Management and Fit, a local polling company. “With this approval, it sends that signal.”

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