Buenos Aires - Argentina's Peronist ruling coalition is teetering on the brink of political crisis, with President Alberto Fernandez facing a fight for control after voters abandoned his center-left party in bruising midterm elections, sapping his power in Congress. The party, a mix of moderates allied with the president and a powerful hard-left faction around Vice President Cristina Fernandez de Kirchner, now has a dilemma: concede ground to work with the opposition, swerve left - or split down the middle: "The government has serious problems. It is a president who is totally drained of power, - said Mariel Fornoni from political consultancy Management & Fit. - The coalition is broken." The Sunday vote saw the Peronists lose their majority in the Senate for the first time since 1983, with a number of provinces swinging sharply away from the government of Fernandez, who swept to power in 2019 on a center-left platform. The loss hobbles his government's ability to push through legislation in Congress, hitting plans for judicial reform and adding complexity to talks over a new $45 billion deal with the International Monetary Fund, which needs lawmaker approval.
Alberto Ramos at Goldman Sachs said in a note that the defeat could leave the ruling party weakened and that "internal dissent over policy direction could grow further, - potentially hurting moderate voices like Economy Minister Martín Guzmán. - This backdrop raises the risk of a (even) more heterodox/interventionist policy mix that could further complicate the already difficult negotiation of an IMF program," he said. "Losing control of Congress implies the government would have to negotiate with a stronger and re-energized opposition that could lead to a noisy and volatile policy making process." In a message recorded after the defeat, President Fernández struck a moderate tone, saying he would call for dialogue with the opposition, redouble efforts to solve the IMF debt, put a economic plan to Congress and take aim at inflation. However, he played down suggestions of reining in public spending, that many see as vital amid tough economic conditions: "It is necessary to get the state accounts in order, but never at the cost of an adjustment in spending. The adjustment was tried repeatedly in Argentina and only deepened inequality and poverty," he said.