Argentine president suffers landslide defeat in Buenos Aires Province legislative elections
The Frente Patria Kirchnerista coalition defeated President Javier Milei’s La Libertad Avanza coalition, writes Thierry Larose, portfolio manager at Vontobel...
The Frente Patria kirchnerist coalition defeated President Javier Milei’s La Libertad Avanza coalition in the Buenos Aires Province elections by a wide margin of 13 percentage points, far exceeding expectations of roughly 5 points.
Voter turnout was particularly low, in the low 60% range and well below the historical average, which adds some complexity to interpreting the results. Still, several clear takeaways have emerged
Key takeaways
Peronist stronghold remains intact: Buenos Aires Province continues to be a bastion of Kirchnerism, with Frente Patria winning six of the eight electoral sections, including the pivotal first and third sections that represent nearly 60% of the provincial electorate.
Loss of centrist support: Milei lost the backing of centrist voters who were decisive in his 2023 presidential victory, many of whom simply abstained from voting.
Backlash to government policies: The government’s recent policy choices, notably its focus on defending the peso at all costs and its systematic vetoes of congressional initiatives to increase social benefits, have generated growing public frustration.
Bribery scandal fallout: The recent bribery scandal is fundamentally different from the earlier Libra scandal and is expected to leave deeper and more lasting political damage.
Broader analysis
On the other hand, the significance of these provincial legislative elections should not be overstated. The results are not necessarily a preview of next month’s midterm national elections, where the sharper polarisation between Kirchnerism and Mileism is expected to drive much higher voter turnout.
Given the government’s economic achievements to date, including disinflation and improved public finances, and its still-decent approval ratings, there is still time to regain some momentum ahead of October. Even a midterm setback would be manageable, provided the government takes decisive steps to rebuild support among centrist congressmen.
From a market perspective, given the magnitude of the defeat, we expect Argentine assets to start the week on a very negative tone, particularly equities and global dollar bonds. As for local bonds and the currency, the spotlight will be on the reaction function of the central bank and the national treasury regarding FX management. While heavy interventions and tighter liquidity conditions would be the expected policy response to contain peso depreciation, such measures risk deepening the economic slowdown and further fuelling public discontent.