In setback for Argentina's Milei, sweeping reform bill sent back to committee

FILE PHOTO: Argentina's President Milei's waves to crowd after swearing-in ceremony in Buenos Aires

By Nicolás Misculin

BUENOS AIRES (Reuters) -A major economic reform package championed by Argentina's libertarian President Javier Milei will be sent back to a legislative committee for consideration, the president's party said on Tuesday, marking a major setback for the bill.

The rejection of many of the bill's provisions by lower house lawmakers played out during the article-by-article approval process, after the body voted to approve the so-called "omnibus" proposal in general terms late last week.

The bill, which had already been significantly reworked by lawmakers, still included provisions to allow for the privatization of state entities, changes to hundreds of regulations, as well as measures to enable reductions in state subsidies.

While Milei won around 56% in a two-candidate presidential run-off vote last November, legislative candidates affiliated with his party fared much worse in a previous round of voting.

Milei has sought backing for the reform package from lawmakers within the main conservative coalition, Juntos por el Cambio, due to his own party's relative weakness in Congress.

The far-right libertarian president's ruling Libertad Avanza party, which controls only 38 seats in the 257-member lower house of Congress, lashed out in a post on X at what it labeled treasonous behavior by lawmakers opposed to the bill, but acknowledged it must now return to committee.

Later on Tuesday, Milei criticized lawmakers he accused of blocking the reform package in a post on social media, deriding them as part of the political "caste" he blames for the country's ills.

"We are not willing to negotiate this with those who destroyed the country," he wrote in a post on X, while in Israel on a diplomatic tour.

Milei has mostly blamed Argentina's dire economic straits, with inflation running at over 200%, on profligate overspending engineered by past governments, especially those led by the center-left Peronists.

Some opposition lawmakers called on Tuesday for those backing Milei's reforms to compromise.

"We ask the ruling party to have some flexibility. They love to keep losing," said opposition lawmaker Miguel Pichetto during the legislative session.

Before the legislation can move on to the Senate for final legislative consideration, it must first secure passage in the lower house.

In the Senate, Milei's party holds just seven seats in the 72-member body.

(Reporting by Nicolas Misculin; Editing by David Alire Garcia and Lincoln Feast.)