Over the weekend Argentinian politics was shaken when a political outsider won the country’s presidential primaries. Javier Milei, a 52-year-old economist who rails against ‘the political caste’, received more votes in a Sunday primary for president than either the centre-right Together for Change coalition or the ruling Peronist movement’s candidate.
Argentina has a unique electoral system where prior to a full presidential election, all potential candidates must enter an open primary. Only those candidates who receive more than 1.5% of the vote in the primary can go on to the general election.
Milei won 30% of the votes. Investors had expected the Together for Change coalition to do better.
‘The low turnout and surprise results have contributed to increased political and market uncertainty’, said Jared Lou, portfolio manager at William Blair Investment Management. ‘Given the poor state of the economy, voters appear to be demanding change’.
On Monday Milei said his win was an ‘enormous slap in the face’ of the government of President Alberto Fernández, who has a 75% disapproval rating and whose term ends in December.
Milei pledged to close the central bank, replace the peso with the dollar, and slash spending.
He has said he opposes abortion in all cases and has also said he is not completely opposed to people selling their organs or their children.
Argentina is suffering its worst economic crisis since its 2001 financial meltdown. About 40% of Argentines live in poverty. An inflation rate of 116% makes it difficult for families to buy food and for businesses to function.
Milei has tapped into bubbling anger, assuring Argentines that if they drastically scale back the government, the country will regain its foothold.
Milei’s strong showing sets up a three-way race that pits him against the two traditional political coalitions; the conservatives and the Peronists. The latter’s rule during most of the last 20 years has seen a sharp rise in public spending.
Economists say Milei may open the country to trade, reduce taxes, and privatise state-owned companies to curb spending.
He has pledged to end public schooling, supports a market for people to sell their organs, proposes to expand access to guns, and plans to end legal abortion.