In the wake of La Libertad Avanza’s unexpected triumph in Argentina’s midterm elections, President Javier Milei’s administration has bolstered its standing in both legislative chambers, thereby facilitating the advancement of an extensive economic reform agenda designed to liberalize the Argentine economy, according to a source. The package encompasses the 2026 budget alongside tax and labor reforms. LLA intends to finalize the budget prior to the end of the year, while also anticipating the need for special sessions over the summer, a period when Congress typically recesses, to further progress its legislative agenda. The national budget has secured committee approval as of Tuesday, allowing for its forthcoming debate on the chamber floor. Nevertheless, sources from LLA informed that they intend to defer discussions until the inauguration of the new legislators in early December. In accordance with Argentine legislation, the Economy Ministry submitted the budget to Congress in September, with Milei delivering a nationwide broadcast to discuss its details, underscoring his commitment to achieving fiscal balance. The macroeconomic projections indicate an inflation rate of 10.1% for 2026, a decrease from the estimated 24.5% in 2025. Additionally, growth is anticipated at 5%, with a nominal dollar exchange rate projected at AR$1,423 by December 2026, which is below the current official rate of AR$1,474.
The latest budget sanctioned by Congress dates back to 2023, indicating that Argentina has functioned for two years without the passage of a new budget by lawmakers. This unique circumstance necessitates that the executive branch allocate funding via decree for the years 2024 and 2025, as growth and inflation have considerably influenced the nominal values of budget line items during the intervening two years. One of Milei’s prominent legislators stated that governors will have the opportunity to negotiate the budget, provided that the financial accounts remain balanced. “Fiscal balance is non-negotiable, because the election results confirm the direction established by this government,” a source familiar with the legislative agenda stated. “They are committed to passing a budget; however, if fiscal balance is disregarded, the president will veto it outright.” The election outcomes will yield LLA a total of 93 deputies, representing an increase of 56 compared to their current count, alongside 20 senators, which is an augmentation of 13 from their existing numbers. Should they manage to garner backing in the Chamber of Deputies from allied parties like PRO or the UCR, they will be nearing the threshold for quorum — the straightforward majority required to initiate congressional discussions. Furthermore, with over a third of deputies responding to LLA, the ruling party will possess the necessary numbers to counter attempts to override Milei’s presidential vetoes, as both houses must achieve a special majority of two-thirds to overturn a veto. Members of LLA are humorously expressing uncertainty regarding the abundance of legislators at their disposal.
The government is implementing two reforms in conjunction with the budget. A tax reform initiative is underway, focused on reevaluating the tax burden; however, the feasibility of tax reductions hinges on maintaining a balanced budget. LLA has pinpointed the check tax, applicable to checking account transfers, and the gross income tax as notably distortive. However, specifics concerning the new regulations remain undisclosed, as the final text of the bill, currently being drafted by Treasury Secretary Carlos Guberman, who maintains robust connections with Congress, has yet to be completed. The labor reform bill is currently under preparation by Deregulation Minister Federico Sturzenegger. The final version remains a work in progress; however, Milei’s legislative representatives assert that the reform aims to register more than 8 million workers currently outside the formal employment sector. The government’s most formidable challenge is expected to revolve around proposals permitting labor negotiations to occur at the level of individual companies or regionally, thereby undermining the existing framework of centralized negotiations facilitated by unions.
In Argentina, every sector is represented by a single union that holds the authority to engage in negotiations with business chambers on behalf of its members, thereby establishing wages and working conditions pertinent to that sector. It is imperative that these agreements be executed uniformly across all firms within the sector. This arrangement consolidates the collective power of workers, thereby enhancing the negotiating strength of union leaders in their dealings with management. Unions are structured into federations like the CGT, which enhance their capacity to negotiate with top-tier business leaders and national authorities. “A large company is not the same as a SME in the interior of Argentina,” a Congress source stated, contending that legislation must consider the significant disparities in company sizes. The prospect of pension reform does not feature in Milei’s current term agenda. “It will be left for his second term,” they quip, adding: “We need more individuals registered [at work], so labor reform takes precedence.”