President Javier Milei on Monday exercised his veto power against a law sanctioned by Congress aimed at enhancing pensions for the elderly and disabled, contending that it would compromise his efforts to achieve fiscal equilibrium in Argentina. It marks the second occasion since August 2024 that Milei, who identifies as a “anarcho-capitalist,” has obstructed a pension increase. In a notice published in the government’s Official Gazette, Milei eliminated a provision that had temporarily permitted pensions for individuals who had not made contributions to the system for the mandated 30 years.
In Argentina, over 40 percent of employment occurs within the informal sector, resulting in a significant number of individuals being excluded from access to the state pension system. Milei assumed office in December 2023, having brandished a live chainsaw during his victorious election campaign to epitomize his initiative to significantly reduce state expenditures. He has halted public works initiatives, terminated the employment of tens of thousands of civil servants, dismantled state agencies, and curtailed assistance. The economy, grappling with a crisis, achieved its inaugural budget surplus in 14 years in 2024, while annual inflation decreased to 39.4 percent in June, a significant reduction from 211 percent at the close of 2023 and 118 percent the previous year.
However, the measures were attributed to pushing millions more individuals into poverty during the first half of 2024, resulting in tens of thousands taking to the streets in protest. Pensioners are reported to be the most adversely affected by Milei’s austerity measures, according to researchers. For several months, retirees have engaged in weekly protests outside Congress, frequently encountering repression from security forces. The benefits available to eligible individuals are sufficient to cover merely one-third of the essential goods basket, approximately US$275 monthly at the official exchange rate, while over 70 percent of retirees exist below the poverty threshold.
Milei’s administration has contended that the increases in retirement and disability pensions were “irresponsible,” as they “jeopardise” the pursuit of fiscal balance. The government would incur an additional cost of US$5 million this year and US$12 million in 2026, according to the statement. In Argentina’s Congress, where Milei lacks a majority, it is technically possible to override the presidential veto with the agreement of two-thirds of lawmakers. Milei’s recent vetoes follow a presidential decree issued a week prior, which reduced taxes on exports of grain and meat.
The President has already exercised his veto power against a proposed funding increase for universities, thereby maintaining their revenue streams in accordance with the 2023 budgetary framework. He also vetoed legislation aimed at declaring an emergency in the care of individuals with disabilities, which sought to regularize the backlog of health benefit payments and ensure their continuation until December 2027. Estimates from the Congressional Budget Office indicate that the Disability Emergency Law resulted in a fiscal impact ranging from 0.22 percent to 0.42 percent of GDP.