Milei vetoes pension increases in bid for fiscal balance

President Javier Milei on Monday vetoed a law approved by Congress to increase pensions for the elderly and the disabled, arguing it undermined his attempts to balance Argentina's budget.

It was the second time since August 2024 that Milei – a self-declared "anarcho-capitalist" – has prevented a pension increase.

In a notice published in the government's Official Gazette, Milei also scrapped a provision that had temporarily allowed pensions for people who had not contributed to the system for the required 30 years.

More than 40 percent of work in Argentina is in the informal sector, meaning many people are excluded from the state pension.

Milei took office in December 2023, having wielded a live chainsaw during his successful election campaign to symbolise his project to dramatically cut state spending.

He has suspended public works projects, laid off tens of thousands of civil servants, gutted state agencies and reduced aid.

The crisis-hit economy registered its first budget surplus in 14 years in 2024, and annual inflation fell to 39.4 percent in June – down from 211 percent at the end of 2023 and 118 percent last year.

But the measures were blamed for tipping millions more people into poverty in the first half of 2024, and brought tens of thousands onto the streets in protest.

Researchers say pensioners are the hardest hit by Milei's austerity measures. Retirees have been protesting weekly outside Congress for months, often met with repression by the security forces.

Benefits for those who qualify are enough to cover only a third of the basket of basic goods, around US$275, per month at the official exchange rate and more than 70 percent of retirees live below the poverty line.

Milei's government has argued that the retirement and disability pension increases were "irresponsible" as they "jeopardise" efforts to achieve fiscal balance.

The increases would have cost the government an additional US$5 million this year, and US$12 million in 2026, it said.

Argentina's Congress, where Milei does not have a majority, can technically override the presidential veto with two-thirds of lawmakers in agreement. 

Milei's latest vetoes come a week after a presidential decree that lowered taxes on grain and meat exports.

The President had already vetoed a funding increase for universities, which keep their revenues tied to the 2023 budget.

He also vetoed a law declaring an emergency in the care of people with disabilities in order to regularise the back payments of health benefits and guarantee them until December 2027.

According to estimates by the Congressional Budget Office, the Disability Emergency Law had a fiscal impact of between 0.22 percent and 0.42 percent of GDP. 

– TIMES/AFP