After suffering an electoral defeat in Buenos Aires province and 40 days from a national vote that will reconfigure Congress, Javier Milei pulled the chainsaw brake. The Argentine president said that “the worst has passed” and announced that in 2026, it will increase spending on retirement, health and education, the sectors most affected by fiscal austerity policy, a constant target of protests. “The effort we are all making is worth it,” said the president, on Monday night, by presenting his budget to Congress to 2026. Milei added that the fiscal balance remains “non-negotiable” and “stone” of his management.
The fiscal adjustment that marked nearly two years of his government – which Milei defines as “the greatest in human history” – has made Argentina reach the first fiscal balance in 14 years and control inflation, albeit with a high social cost in sectors such as social security, health, among others. In a 15 -minute speech on a national network, Milei said the budget for next year will increase retirement spending by 5%, 17% with health and 8% with education, all above inflation. The aid granted to people with disabilities will also grow 5% above inflation, according to Milei, who adopted a more serene tone than usual.
“The most important change was in the speech. What was seen was a more moderate Milei and recognizing the defeat,” said economist Juan Manuel Telechea. “In a way, self -criticism, recognizing that the adjustment has limits. It’s a change to attract votes in October.”
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Casa Rosada did not get a consensus in Congress to approve previous budgets. Therefore, Milei has been overwhelmingly operating in a discretionary manner with the extension of the 2023 budget, which in some cases was outdated from the inflation of 117.8%, 2024, and 19.5%in the first eight months of 2025.
The announcement comes at a delicate political and economic moment, after the recent defeat to the peronism of his party, freedom advances, in the legislatures of the province of Buenos Aires on the 7th, and just over a month from national legislative elections on October 26, which will reconfigure Congress. The setback caused some Argentine actions on Wall Street and Buenos Aires stock market, as well as a dollar and country risk.
The 2026 budget foresees a 5% GDP growth, an annual inflation of 10.1%, 1.4% of GDP surplus and an average dollar value of 1,423 pesos, below the current price, according to the agency France Presse. For Juan Luis Bour, director of the Latin American Economic Research Foundation (Faithful), Milei’s increases are “challenged” by the need to “maintain fiscal balance.” “Next year, there are expense increases on the financial side. If there are not enough resources, it will be necessary to cut spending in other areas,” he said.
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Opposition
The governor of the province of Buenos Aires, the peronist Axel Kicillof, said the phrase “The Worst Passed”, used by Milei, “is part of a repertoire beaten of Argentina right phrases.” “The problem of Milei is that he sold illusions in the campaign, said he would make an original, innovative policy, because he would make an adjustment that would be only for the caste, but eventually hit retirees and other sectors,” he said.
Earlier this month, Congress first rejected a veto of Milei to a law that allocated more resources for the government agency for people with disabilities, shaken by allegations of corruption involving their sister and secretary general presidency, Karina Milei. According to a survey at Torcuato Di Tella University, the government confidence rate had already fallen 13.6% in August, compared to the previous month, even before the corruption case surfaced. This adds to the malaise of his coalition, both for the electoral defeat and the scandal.
