Explainer-Argentina presidential election: Key takeaways from Milei’s win

BUENOS AIRES (Reuters) – Argentina elected radical libertarian Javier Milei as president in a run-off election on Sunday, giving the outsider candidate who has pledged to “blow up” the status quo a four-year mandate that will start on Dec. 10.

Milei beat Peronist Economy Minister Sergio Massa by a wide margin, pulling in almost 56% of the ballot, some 14.5 million votes, as he rode a wave of anger at inflation soaring towards 150% and biting poverty.

Here are some key takeaways.

A VOTE FOR CHANGE

The result marks more than anything else a vote for something new and a rebuke to the Peronist government, which has been at the helm as the country’s inflation rate has hit its highest level since 1991.

Milei, who got 30% in an October general vote, took the lion’s share of the middle ground voters from losing first round candidates, including those of mainstream conservative Patricia Bullrich who gave him her endorsement ahead of the run-off.

Voters on the right and center rallied around Milei as a vote against Massa and the Peronists, whom many blame for exacerbating the economic crisis.

Milei did well in key regions including capital city Buenos Aires and the important central Cordoba province, where he got around three-quarters of the second round vote.

MILEI HAS A CHALLENGE AHEAD

Some analysts pointed to Milei’s larger-than-expected vote – pollsters had estimated a tight run-off – as a sign he would have a robust mandate, but the libertarian who only got into politics a couple of years ago faces serious obstacles.

He was only the first choice candidate – as per the first round – for less than a third of voters, meaning he owes a lot to his more mainstream backers. This could moderate his plans such as shutting the central bank and dollarizing the economy.

His Liberty Advances coalition has no regional governors or mayors in a strong federal system, limiting his power in the provinces, home to Argentina’s lithium and shale reserves.

In Congress, meanwhile, Milei only has a small number of seats which will hold up or even block potential reforms. He will have seven seats out of 72 in the Senate and 38 out of 257 in the lower Chamber of Deputies.

The defeated Peronists will remain the largest minority bloc in both chambers.

“We suspect that some of his more radical proposals – namely dollarization – may not materialize given limited support both in congress and among the public,” William Jackson, Chief Emerging Markets Economist at Capital Economist wrote in a note.

WHAT’S AT STAKE?

Milei’s election comes at a time of huge uncertainty for the South American country facing its worst economic crisis in two decades. Milei wants to dollarize the economy and cut the size of government, which could be painful reforms for a population already grappling with over 40% poverty.

His incoming government will have to resuscitate an economy facing triple-digit inflation, negative net foreign exchange reserves, and a sliding currency. Meanwhile, a $44 billion loan program with the International Monetary Fund is creaking.

Investors are hoping he will push through his reforms to make the country more fiscally responsible, while the fact he has had to ally with more moderate conservatives will rein in his sometimes volatile nature and more radical plans.

WHO IS MILEI?

Milei is a 53-year-old economist running for the libertarian La Libertad Avanza bloc, who often wears leather jackets and has drawn comparisons with former U.S. President Donald Trump and Brazilian former leader Jair Bolsonaro for his abrasive style.

During the campaign Milei often appeared at rallies brandishing a chainsaw, a not-too-subtle illustration of his plans to slash government spending and take down the political elite, which he calls a “caste”.

(Reporting by Maximilian Heath; Editing by Adam Jourdan and Christina Fincher)