By Nicolás Misculin and Leila Miller
BUENOS AIRES (Reuters) -Argentine President Javier Milei's party cruised to victory in midterm legislative elections as voters backed his free-market reforms and deep austerity measures, providing a mandate for him to push forward with his radical overhaul of the economy.
The results will also likely be welcome news to U.S. President Donald Trump, whose administration recently provided Argentina with a hefty financial bailout but had threatened to pull away if Milei did not do well.
Analysts said the stronger-than-expected showing could reflect fear of renewed economic turmoil if the country abandoned Milei's policies which, while painful at times, have succeeded in drastically slowing inflation.
ARGENTINE PUBLIC WARY OF PAST ECONOMIC CRISES
Gustavo Cordoba, the director of the Argentine Zuban Cordoba polling firm, said he was shocked by the results and thought they reflected public wariness over a possible return to the economic crises of past governments.
"Many people were willing to give the government another chance," he said. "We'll see how much time Argentine society gives the Argentine government. But the triumph is unobjectionable, unquestionable."
Cordoba said Milei's government appeared to have secured the one-third of seats it needs in the Chamber of Deputies to prevent any future presidential vetoes from being overturned by Congress. Several key Milei vetoes of spending bills were overriden in the months ahead of the midterms.
"The result is better than even the most optimistic Milei supporters were hoping for," said Marcelo Garcia, Americas director of risk consultancy Horizon Engage.
"With this result, Milei will be able to easily defend his decrees and vetoes in Congress," Garcia said, adding that allies will have more of an incentive to support a winning president.
The White House and foreign investors have been impressed by the government's ability to significantly reduce monthly inflation from 12.8% before Milei's inauguration to 2.1% last month, while achieving a fiscal surplus and enacting sweeping deregulation measures.
To support Milei, the Trump administration offered a bailout potentially worth $40 billion, including a $20 billion currency swap that is already signed and a proposed $20 billion debt investment facility.
The White House did not immediately respond to a request for comment on Sunday's election result.
MILEI GETS BIG WINS IN BUENOS AIRES AND NATIONALLY
The president's party, La Libertad Avanza, scored 41.5% of the vote in Buenos Aires province compared with 40.8% for the Peronist coalition, according to official results. The province has long been a political stronghold for the Peronists, marking a dramatic political shift.
Nationwide, La Libertad Avanza got 64 seats in the House of Deputies, up from 37, according to government figures.
Half of Argentina's lower Chamber of Deputies, or 127 seats, as well as a third of the Senate, or 24 seats, were up for election in the midterm vote. The Peronist opposition movement held the largest minority in both houses, overshadowing Milei's relatively new party.
Political experts had said that capturing more than 35% of the vote would be a positive outcome for Milei's government and could allow him, through alliances with other parties, to block opposition lawmakers from overturning his vetoes of laws that he said threaten Argentina's fiscal balance.
Milei has said he expects a cabinet shake-up after the election that could include members of the centrist PRO party, a frequent ally of the government in Congress led by former President Mauricio Macri.
Bonds and stocks are expected to rally on Monday when markets open, as the result gives Milei the votes and political capital needed to accelerate his reforms.
Many analysts also predict there will be a devaluation of the peso, which they say has been overvalued to contain inflation.
(Report by Nicolás Misculin and Leila Miller; additional reporting by Lucila Sigal, Jorge Otaola and Eliana Raszewski; Writing by Alexander Villegas; Editing by Rosalba O'Brien, Nia Williams, Christian Plumb and Edmund Klamann)
