Argentina's President Milei faces setback in Buenos Aires provincial polls

Milei's recently formed libertarian party lagged with nearly 34 per cent of the vote, with the majority of votes counted

Argentine President Javier Milei suffered a sweeping setback Sunday in the Buenos Aires provincial election that is viewed as a barometer for how his libertarian party will perform in crucial congressional midterms next month.

Milei's recently formed La Libertad Avanza party captured just 34% of the vote in Argentina's biggest province, losing by a landslide to the left-leaning Peronist opposition, which secured 47% with the majority of ballots counted late Sunday.

Milei conceded that his right-wing party's crushing 13-point loss to his populist rivals represented a clear defeat".

"If anyone wants to begin rebuilding and moving forward, the first thing they must do is accept the results," Milei told his grim-faced supporters at the party headquarters. They were not positive. We suffered a setback, and we must accept it responsibly.

With Milei's close associates embroiled by a graft scandal and struggling to stabilise a misfiring economy ahead of congressional midterm elections in late October, the results were being closely scrutinised for their potential to rattle investors and roil jittery global markets.

While analysts expected La Libertad Avanza to lose by a few points to the Peronists, his allies feared that a worse-than-expected outcome in Buenos Aires province which makes up nearly 40% of the country's population would galvanise his rivals at a critical time.

Milei needs to expand his party's tiny minority in the opposition-dominated Congress in midterms next month to fulfil his radical libertarian vision for Argentina's crisis-stricken economy.

This result is a key data point to understand the social mood where the opposition stands, the state of Peronism and the level of support for the government in Argentina's most important electoral district, said Juan Cruz Daz, the head of Cefeidas Group, a consultancy in Buenos Aires.

While not the main national election in October, it is nonetheless a wake-up call for the government, and how it reacts will be crucial to understanding the evolving political map.

Although Milei can boast of bringing down Argentina's triple-digit inflation and ceasing the reckless spending of his Peronist predecessors, Argentines have yet to collect on the economic revival that was supposed to follow the pain of his harsh austerity measures.

His government has unwound Argentina's labyrinthine currency restrictions as part of a $20 billion International Monetary Fund bailout, but has not yet won the trust of international financiers who would bring the investment to yield jobs and turbocharge economic growth.

Milei has a very strong ideology, and his vision is that the state has to have a minimal impact and investments have to come from the private sector. But that hasn't materialised yet, said Ana Iparraguirre, an Argentine political analyst and partner at Washington-based strategy firm GBAO.

Former President Cristina Fernndez de Kirchner, who remains the most influential Peronist leader despite a corruption conviction that has banned her from politics for life and placed her under house arrest, enjoyed the opportunity to mock her greatest political foe.

Did you see that Milei? the two-term former president (2007-2015) wrote on social media platform X. Get out of your bubble, brother... Things are getting heavy.