Argentine President Javier Milei signed vetoes striking down two laws increasing pension and disability funds that were passed last month, government sources confirmed to the Herald. Congress could reverse the decision, which is set to be made official in Monday’s official gazette.

The news comes as no surprise, as the president has been adamant that he would overrule the raise since before the bills were passed. He has systematically argued that they would jeopardize the country’s fiscal surplus, which his administration accomplished through sweeping cuts. The International Monetary Fund (IMF) staff report published on Friday also mentioned that the vetoes were coming.

In an interview with streaming channel Neura aired on Thursday night, Milei said the approval of the bills was partly responsible for weakening the country’s currency, the peso. 

The exchange rate surged to AR$1,380 this past week, in what the president claimed without evidence was a conspiracy concocted by local banks, U.S. Nobel laureate Joseph Stiglitz, opposition lawmakers who voted for the bills, and Vice President Victoria Villarruel, who validated the Senate session where the initiatives were passed.

“The traitor,” he said, referring to his vice president, “allowed an illegal session to take place in order to upset our fiscal balance.” “That caused a stir and triggered a currency run, a speculative attack,” he added.

The opposition gears up for a “difficult” session

The laws Milei has revoked are three — one increasing retirement pensions by 7.2% and taking a minimum bonus from AR$70,000 to AR$110,000 (US$50 to US$80 at the official rate). Currently, monthly retirement pensions are AR$384,305 (US$279). The poverty line in Argentina for a three-person household is AR$898,336 (US$653).

The second approved bill was an extension of a pension moratorium, which allows people who have not completed the required number of years to retire to “buy back” the funds they need. The third initiative increases funding for people with disabilities. That bill declares a state of emergency for disabled people until December 2027, guaranteeing budget allocations to increase payments to service providers and settle the debts for nurses, companions, and transporters.

Following Milei’s decision, the ball is now in Congress’ court. The legislative branch can overturn presidential vetoes if both the lower and the upper house manage to secure a two-thirds majority. A deputy session is scheduled for next Wednesday, but the vetoes are not on the agenda, potentially pushing the issue back to August 13.

“I think there is a chance that the laws relating to disability will be upheld,” Socialist Party deputy Esteban Paulón told the Herald. “It is a very sensitive issue and one that has had a significant public impact.”

However, he said that the laws increasing pensions are a different tune, as the increase and the moratorium were approved by a narrow margin. “What I think could go through and be upheld is the bonus increase, as an emergency update to make up for the loss [in purchasing power].” 

Paulón said that whether the laws will be maintained will depend on the current negotiation of the candidates’ ballots for October’s midterm legislative elections. Ruling party La Libertad Avanza (LLA) and PRO are allies in several districts and would potentially be the two sides most committed to keeping in veto in place.

Because of that, some prefer to play the waiting game. A Peronist deputy told the Herald that, since some UCR and PRO lawmakers could play quid-pro-quo with Milei, offering their vote for a place on the ballot, Peronists are going to wait until the negotiations are over. 

“We will not walk into the trap of debating it this Wednesday,” the lawmaker said. “We believe libertarians will fall into sectarianism,” they added, implying that they will not incorporate candidates from other parties. The logic is that, once UCR and PRO lawmakers are sidelined from LLA’s ballots, they will not have a reason to back the vetoes.

Coalición Cívica deputy Marcela Campagnoli said it will depend on the negotiations between the national administration and provincial governors. “It depends on how many governors will withdraw their representatives from the chamber so that the ruling party can obtain the number needed to uphold the veto,” she told the Herald.

Carlos Gutiérrez, a Peronist deputy from Córdoba, said that it also depends on how many lawmakers the government can “turn” ahead of the vote. “It won’t be easy, but we are going to try,” he told the Herald.

“If this country has to veto a meager increase for retirees because it compromises fiscal surplus, we are in trouble,” he said.

Last year, Milei vetoed another pension increase approved by Congress in his first use of the presidential power since taking office. At the time, the veto was backed by 87 deputies, whom the president later called “heroes” and invited to a celebratory asado — an Argentine barbeque — in the presidential residence.