Argentina’s Macri Wins Big Endorsement in Midterm Elections

Argentine President Mauricio Macri’s reform agenda received a critical boost on Sunday after his Cambiemos alliance gained ground in congressional mid-term elections.

Preliminary results showed Cambiemos is set to win Argentina’s five largest electoral districts, including the key battleground of Buenos Aires province where his ally Esteban Bullrich defeated ex-President Cristina Fernandez de Kirchner, a fierce critic.

With 99 percent of votes counted, Bullrich was on 41 percent with 37 percent for Fernandez, according to the National Electoral Directorate. At a national level, Cambiemos won in 12 out of 24 provinces and gained between 41 percent and 42 percent of the total vote, Cabinet Chief Marcos Pena said.

"We are the generation that is changing history,” Macri told a crowd of supporters in Buenos Aires. "This is only just beginning."

The result will mean gains for Macri in both houses of Congress, and likely strengthen his chances of passing an overhaul of tax and labor laws that he says are an impediment to economic growth.

“It’s almost an ideal situation because he’s got a nationwide victory at a level we haven’t seen for mid-term elections since 1985,” said Juan Cruz Diaz, managing director at the Cefeidas Group, a regulatory risk advisory firm based in Buenos Aires.

The peso has gained 1.7 percent since the Aug. 13 primaries when Cambiemos fared better than expected. Argentine bonds rose 6.9 percent in the same period to trade near all-time highs.

Damaging Blows

In the Senate race, the party with most votes is awarded two seats while the runner-up gets one, so both Fernandez’s and Bullrich’s presence in the Senate is guaranteed.

However, a first-place finish for Fernandez, the former president, who campaigned in favor of a brake on what she described as Macri’s austerity drive, would have diminished Macri’s overall victory and could have been seen as a vote against his efforts to open the economy.

Fernandez conceded defeat but said that her new alliance, Unidad Ciudadana, had increased its vote tally from the primaries, making her the principal leader of the opposition.

"Unidad Ciudadana is here to stay,” Fernandez said at her alliance’s electoral base. "Nothing has finished here.”

Macri also dealt damaging blows to two regional leaders widely seen as potential presidential challengers in 2019. In Cordoba, Argentina’s second largest province, Macri’s alliance defeated Governor Juan Schiaretti’s alliance, while in the northwestern province of Salta, Governor Juan Manuel Urtubey’s alliance was also soundly defeated.

Macri is expected to submit at least four bills to Congress in the first week of November to try to reform the country’s fiscal and tax systems and implement an amnesty for employers with unregistered workers, a senior member of the government told Bloomberg last month.