BUENOS AIRES, Argentina (AP) — Argentina's lower house on Friday approved President Javier Milei's sweeping economic overhaul bills, sealing a much-needed legislative victory for the libertarian leader after six months of bruising battles and raucous protests that had raised questions about his ability to govern.
Milei's landmark legislation, which seeks to support his “zero fiscal deficit” plan and attract foreign investment, passed a final vote in the lower house to become law on Friday.
The approval — widely expected after the bills squeaked through the Senate earlier this month despite fierce political opposition — strengthens the president's hand at home and abroad as economic pressures mount. Milei rode to power on a promise to pull Argentina out of a dire economic crisis that has deepened poverty and driven annual inflation near 300%.
Milei's administration hailed the law's passing as setting Argentina “on the path toward the free and prosperous country that Argentines chose” in last November's election. The government blamed the turbulent process on "obstructionism" by Milei's hard-line opponents.
Milei's party controls less than 15% of congressional seats and has so far relied on executive powers to slash public spending and impose the president's radical small-state vision. Analysts have said that only congressional approval could offer Milei the support he needs to boost investor confidence in Argentina, a country with a long history of defaulting on payments and breaching contracts.
“This is a major win for Javier Milei,” said Bruno Gennari, Argentina specialist at KNG Securities, adding that already the vote had boosted bonds. “He had to make substantial concessions to get his first bill through Congress but the reforms it brings to Argentina are still sweeping.”
The state overhaul bill with more than 230 articles passed the friendlier lower house comfortably. The lower house of Congress, known in Argentina as the Chamber of Deputies, had already approved the content of the legislation in April, sending the bills to the Senate for further debate that ended with a closely fought vote.
This time, the Chamber of Deputies held an up-or-down vote to the amendments that senators had made during their June 13 session.
Lawmakers approved the modifications early Friday and much of the 12 hours of heated debate focused on an income tax for 1 million more workers and a wealth tax championed by cash-strapped provincial governors.
The legislative package includes major incentives for foreign companies investing more than $200 million Argentina, a plan to privatize some state-owned companies and a contentious expansion of presidential powers over economic policy.
Much criticism of the bill has focused on the incentive scheme, which the government says is crucial for its goal to eventually lift capital controls but skeptics say goes too far in privileging foreign firms with lucrative tax breaks and other perks.
Labor deregulation measures allowing employers to fire workers for participating in protests also passed despite fierce backlash from the country's powerful trade unions that rallied outside Congress on Thursday, shouting against Milei and banging drums.
Although the law heralds a significant shift away from the budget-busting economic model of the country's left-leaning Peronist movement, it has been significantly watered down from Milei's original proposal, which boasted over 600 articles.
For instance, Milei entered office planning to privatize more than three dozen state companies, including big names like the flagship carrier Aerolíneas Argentinas, the national bank and state oil company. In the end, he managed to get approval for the sale of just six lower-profile public firms like the Buenos Aires sanitation provider.
Milei, who has characterized himself as a “mole” seeking to destroy the state from within and derided lawmakers as “rats,” has run into obstacles winning over political allies.
In recent weeks he fired his inexperienced Cabinet chief and assigned negotiations with the opposition to Interior Minister Guillermo Francos, a smooth political operator with close ties to a range of political parties.
Signaling he would capitalize on his momentum to achieve further accords, Milei announced he would invite governors and other powerful politicians to come together on Argentine Independence Day, July 9, to sign a grand national pact committing to his overhaul.
Still, analysts said that the vote, after months of congressional paralysis, underscores just how polarizing Milei's agenda remains.
“Milei can get a law to pass Congress, but it took him a long time," said Lucas Romero of the political consultancy Synopsis. “The time it took indicates the legislative weakness with which he governs.”
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Associated Press writer Isabel DeBre in Buenos Aires contributed to this report