Argentina Senate Increases Pension Spending Against President Milei's Austerity

BUENOS AIRES, Argentina (AP) — In a significant political setback for President Javier Milei, Argentina’s Senate approved a pension spending increase on Thursday, which is projected to cost at least 0.4% of the nation’s gross domestic product. This move undermines Milei's stringent austerity measures and highlights his diminishing influence in Congress, where leftist and centrist lawmakers dominate. Notably, nearly all dissenting votes came from Milei's own party, indicating a failure to secure support from more moderate right-wing factions. Milei's administration has condemned the legislation, labeling it as “demagogic populism” and vowing to veto the bill, which they argue imposes excessive financial burdens. The president's office criticized the bill as “irresponsible, illegal, and unconstitutional,” asserting that the government is prepared to face the repercussions of its decisions to restore the country’s economic stability. However, lawmakers could potentially override this veto if they achieve a two-thirds majority in a subsequent vote. The pension law, which includes an over 8% increase in retirement benefits, raises concerns among investors regarding Milei's capacity to implement his radical economic agenda. Since taking office, Milei has achieved a rare fiscal surplus by drastically cutting state spending and halting public projects. Analysts warn that the passage of this pension reform could jeopardize the core of Milei’s fiscal strategy, as pensions have significantly depreciated in value amid soaring inflation and currency devaluation. Supporters of the pension increase argue that since 2017, pensions have lost 45% of their value, with the minimum monthly pension currently around $233, while the cost of living exceeds $300. This situation underscores the urgent need for reform in a country grappling with chronic economic challenges.