What's Happening?
Argentina's Congress has approved the 2026 budget proposed by President Javier Milei, marking the first budget passed since his election over two years ago. The budget, which includes $102 billion in spending
and projects a 5% growth with 10.1% inflation, aims to achieve a zero deficit primarily through spending cuts. The Senate passed the budget with 46 votes in favor, 25 against, and one abstention, following approval from the lower Chamber of Deputies. Despite triggering protests, Milei remains committed to his controversial austerity measures, which have been a hallmark of his administration. The budget approval comes after Milei's government previously extended the 2023 budget without congressional approval, leading to inflation across various sectors.
Why It's Important?
The approval of the budget is significant as it reflects President Milei's ability to push through his economic agenda despite public opposition. The budget's focus on austerity measures and spending cuts is intended to stabilize Argentina's economy, which has been plagued by inflation and fiscal deficits. However, these measures have sparked protests, indicating public discontent with the government's approach. The budget's passage also highlights the growing influence of Milei's party, La Libertad Avanza, in Congress, which could facilitate further reforms in Argentina's labor and tax systems. The outcome of these reforms could have broader implications for Argentina's economic stability and its relationship with international partners, including the United States.
What's Next?
Following the budget's approval, President Milei is expected to continue pursuing additional reforms, particularly in labor and tax laws. The government's ability to implement these changes will depend on its capacity to maintain support within Congress and manage public dissent. The protests against the budget suggest that Milei may face significant challenges in enacting further reforms without addressing public concerns. Additionally, the government's economic policies will likely be closely monitored by international investors and financial institutions, which could impact Argentina's access to foreign investment and economic aid.
