Argentina: Milei’s Victory in Mid-Term Legislative Re-Elections: The Corporate Aftermath

Executive Summary

• Milei’s mid-term victory strengthens his political position and reduces near-term impeachment or obstruction risks, providing greater room to advance fiscal and market-oriented reforms.

• The government is expected to continue inflation reduction, deficit control, and tax/labour reforms, improving regulatory predictability and reducing sovereign risk premia.

• However, governance and compliance risks have increased due to the ongoing “CryptoGate” investigation and alleged irregularities in public procurement involving senior figures in the administration.

• Financial markets have responded positively post-election, with renewed corporate and provincial debt issuance, though balance-sheet pressures persist in energy, agriculture, and manufacturing.

• Social unrest linked to austerity measures remains the primary medium-term risk and may affect operational stability in major urban centres.

  
  

Business Implications

On 26 October 2025, Argentinian President Javier Milei won the mid-term legislative elections in Argentina. He has obtained strong results in the provinces of Cordoba, Mendoza, Santa Fe, and Rios. This victory comes after his poor results in the regional elections in the province of Buenos Aires. While his party does not hold an absolute majority, the new composition of Congress makes an impeachment scenario highly unlikely unless internal defections occur within La Libertad Avanza. By strengthening his political standing, Milei’s recent electoral performance has reduced the immediate threat of a vote of no confidence. Following the results, Milei announced that his plan of economic stabilisation would aim at reducing and poverty, as well as fostering economic growth.

Milei required decisive legislative power to pass the normative reforms in Argentina. These electoral results allow Milei to push his so-called libertarian agenda for various reasons. Firstly, the new composition of the Legislative Chambers renders it mathematically impossible for a political trial to come into fruition. Milei is almost certain to conclude his fourth-year mandate. The only wildcard scenario making it a reality would involve MPs from Libertad Avanza deciding to remove Milei from office. Secondly, peronismo supporters will not be able to successfully pass laws that increase public spending without providing sufficient funding for it.  Milei’s administration is likely to veto Congress laws and has said that institutions will not be able to circumvent the presidential veto. Milei’s strengthened legislative position has several potential implications for the business environment, including:

• Lower taxes in selected sectors.

• Reduced public deficit and lower sovereign borrowing costs.

• Greater regulatory predictability for investors.

• Potential labour and tax reforms aimed at improving competitiveness.

Current polling suggests that, for now, a significant share of the electorate either supports the government or does not feel strongly enough to mobilise against it.

   Data extracted from the Economic Freedom Index from 2023, Fraser Institute

Understanding the Lower Scores: Rule of Law, Property Rights, and Government Integrity

Milei has declared himself an admirer of cryptocurrencies, labelling them a symbol of economic freedom. In February 2025, he promoted the cryptocurrency $LIBRA, which caused its price to surge within minutes and attracted thousands of investors. However, shortly after, the asset collapsed, generating massive losses and leading to accusations of fraud and market manipulation. The incident damaged his reputation and fuelled criticism regarding the lack of crypto regulation, highlighting the risks posed by government officials backing up financial projects with little transparency or supervision. The phenomenon, described as a rug pull, left thousands of investors facing heavy losses, with billions lost in the process.

As a result of the ensuing political crisis, Milei now confronts legal threats, including criminal conspiracy and breach of public duties, as well as calls for impeachment. Nevertheless, his grip on power does not appear to be slipping as badly as polls were suggesting in August 2025. Argentina’s federal prosecutor, Eduardo Taiano, has ordered the opening of an investigation to determine whether Milei’s role in promoting the cryptocurrency constituted a criminal offence. Requests for information were sent to the Central Bank of Argentina, the National Securities Commission, and the cybercrime unit to trace the websites and contracts involved. The inquiry has already been informally labelled “CryptoGate”.

From a regulatory standpoint, Milei’s consolidation of power and the low likelihood of impeachment further fuels concerns about a potential abuse of authority and political volatility. Despite economic reports highlighting Milei’s progress in tackling inflation and poverty, the scandals and legal troubles force investors to reconsider the quality of governance and financial environment.

Graph showing Argentina’s overall score over time per Economic Freedom category, Heritage Foundation

On 20 August 2025, leaked audio files brought Milei, his sister Karina, and Diego Spagnuolo, former Head of the National Disability Agency (and Milei’s lawyer), into the spotlight. His sister Karina has allegedly received backlash related to the payment of disability medication programmes, resulting in legal action led by the Federal judge Sebastian Casanello and prosecutor Franco Picardi. The case, now under judicial review, has increased perceptions of institutional risk and may elevate due diligence and compliance exposure for firms operating in:

• Healthcare and pharmaceuticals

• Public procurement and logistics

• Government-linked service contracts

Political Co-Dependence and Prospects

The White House did not hesitate to praise Milei for his electoral results. In return, the Argentinian President has embraced the US support and asserted “having received inestimable help” to win the elections. Milei had reportedly accepted a bailout of $40 billion bailout from the Trump administration. Although the political consequences of this alliance are yet to materialise, there exists an underlying risk of compromising government integrity. The risk could entail undemocratic and external political interference in policymaking.  A past example highlighting a similar alignment can be traced back to Argentina under Menem (1990s), which exacerbated foreign dependency.

Regardless, investors reacted enthusiastically upon hearing the electoral news and the Argentine peso received a boost in late October 2025, leading Argentinian provinces and companies to prepare for a wave of debt issuance. With Milei’s victory signalling that his reforms (especially the labour and tax ones) will move forward, Argentina’s risk premium has reduced significantly. arge energy companies such as YPF and Tecpetrol — which have previously issued debt (e.g. YPF in 2024) — are now returning to the markets with new debt offerings, while provincial issuers prepare dollar-denominated bond sales. As reported by Fitch Ratings and A&O Shearman, the Argentine corporate Tecpetrol’s 750 million dollar offering constitutes a milestone as an international issuance, helping Argentina rekindle its engagement positively with the global markets.

This turn of events is significant; Personal Finance, citing Ezequiel Fernandez, Head of Credit and Equity Research at Balanz Capital, states that balance sheets in sectors such as energy, agriculture, and manufacturing continue to highlight financial pressures. Despite Milei lowering taxes in some sectors, such as agriculture, he has only minimally reduced the large fiscal deficit. This has been a prosperous primary sector in the last 70 years and is very much open to foreign trade, selling mainly to international buyers in exchange for foreign currencies. Almost every single Argentinian government has increased their spending capacity.

Equally, it is not all plain sailing. Social backlash has arisen against some of Milei’s past positions, particularly regarding cuts to public expenditure on higher education, disability allowances, and pensions—areas that operated in deficit under previous administrations. Milei’s austerity measures sparked protests in both 2024 and 2025, and they are likely to intensify over the medium term (1–2 years) as he gains greater room for manoeuvre.