Combined with the decline of Argentina’s domestic stock market, The Argentine peso fell more than 3% and over-the-counter bonds averaged a further 1.2% after Javier Milei’s government suffered a legislative defeat this morning. On the other side, Argentina’s country risk indicator rose from 52 basis points to 2,395 units.

The abandonment of many articles of the reform package promoted by the Libertad Avanza coalition comes as part of serious economic crisis in Argentina.

Since its inception, The Omnibus Law faced opposition from various sectors of the Argentine population, including the main trade unions in the South American country. Last week, protesters opposed to the reform package clashed with riot police outside Argentina’s legislative palace as the reform bill was being debated in the Chamber of Deputies.

After the reform package was rejected Argentine President Javier Miley called lawmakers who voted against his reform proposal “traitors.” “We are going to continue our program with or without the support of the political leadership that has destroyed our country,” Miley said via his previously created Twitter account, X.

The “omnibus law”, which promoted the privatization of parastatals and gave special powers to the president of the republic, will be discussed in commissions. The Libertad Avanza coalition, led by Miley, has only 38 of the 257 seats in the Argentine Congress’ Chamber of Deputies and 7 of the 72 seats in the Senate. Miley’s government will therefore have to seek political agreements with the opposition to advance its reform project.