Date first published: 17/08/2023

Key sectors: all

Key risks: policy uncertainty; governability; political stability; economic

Risk development

On 13 August far-right libertarian Javier Milei unexpectedly won most votes in the presidential primaries. He secured 30.2 per cent of the ballots cast, defeating the candidates from the two coalitions that have ruled the country for the past 20 years. The opposition centre-right Juntos por el Cambio (JxC) coalition secured a total of 28.2 per cent of the vote, while the ruling Peronist Union por la Patria (UP) coalition came in third with 27.1 per cent.

Following the primaries – and given that the general elections will not be held until 22 October – the central bank devalued the peso by 22 per cent to ARS350 per US dollar, with no further changes expected in the official exchange rate at least until end-October. Prior to 13 August the so called “blue” US dollar – the country’s parallel exchange rate – was trading at ARS605. On 16 August the exchange rate was at ARS780 per US dollar. The devaluation is expected to lead to double-digit monthly inflation, aggravating a protracted economic and financial crisis that the incoming administration will doubtlessly face with radical austerity measures amid high governability and civil unrest risks.

Why it matters

The primary elections are simultaneous and mandatory, turning them into a very strong indicator of who has a strong chance of becoming president. Milei’s performance has changed the political landscape ahead of the 22 October vote.

To win outright, a candidate must secure 45 per cent of the vote or 40 per cent with a 10-percentage point lead from the runner up. Therefore, a presidential runoff – which would take place on 19 November – is highly likely. Hawkish former security minister Patricia Bullrich defeated moderate Buenos Aires Mayor Horacio Larreta and became the JxC presidential candidate. Bullrich faces the challenge of attracting some of Milei’s voters while not pushing Larreta’s supporters towards Economy Minister Sergio Massa – the UP candidate. Milei and Massa will continue to polarise, while JxC will have to work hard to show unity after an unnecessary confrontation between Bullrich and Larreta in the primaries campaign.

Milei has vowed to dollarise the economy, “blow up” the central bank and use a “chainsaw” to cut public spending. This has raised market concerns over his ability to govern amid lack of clarity on his policy implementation plan – and on who within the establishment would support it. Despite these concerns, Milei managed to capitalise the ever-growing anti-establishment vote, particularly among the youth and in the country’s poorest districts. Although his La Libertad Avanza (LLA) party performed poorly in recent gubernatorial elections, and despite having almost no representation in Congress, libertarians have broken into the country’s politics and are set to play a crucial role in the incoming administration.


Chronic economic difficulties have continued to deepen, the poverty rate is at almost 40 per cent and annual inflation at 113 per cent in July – which does not consider the recent official 22 per cent peso devaluation. This combined with rampant corruption and a security crisis linked to increasingly violent crime and widespread insecurity are amongst the key factors that have led to Milei’s shocking election result.

Risk outlook

The primaries have once again added uncertainty – this time to an unprecedented degree – to an electoral process that will lead to an administration that will struggle to govern regardless of who becomes president. Radical change – at this stage – should be shocking, but not surprising.