Markets on alert: Milei faces two months of high rates, pressure on the dollar, and the shadow of the Buenos Aires elections.

Javier Milei hinted Friday night, during his presentation at the Rosario Stock Exchange , that the financial turmoil will continue for some time. He pointed to the September 7 elections as a "ceiling" for Kirchnerism's aspirations and expressed confidence in achieving a significant victory in the October legislative elections.

However, the President did not mention the scandal surrounding the audio recordings attributed to Diego Spagnuolo , former director of the National Agency for Disability (ANDIS), which speak of possible bribes linked to the purchase of medicines. Although the government avoided commenting publicly, the Casa Rosada admits that "some heads are going to have to roll."

The impact on the markets was immediate. While Wall Street and most emerging markets celebrated the possibility of a US rate cut, Argentine stocks fell an average of 2% in New York . Political uncertainty and financial coordination failures continue to keep investors away.

The big question is how long interest rates will remain at around 60% per year. The economic team itself acknowledges that there will be no room to lower them until at least after the legislative elections on October 26.

The government knows that the continuation of the high-interest rate scenario will have a direct impact on economic activity. According to the consulting firm Equilibra, the Treasury has already suffered an increase in interest payments of 1.3 trillion pesos from August to February 2026, equivalent to 0.13% of GDP . And the bill will continue to grow as debt with such high yields is renewed.

For businesses, especially SMEs, the situation has become critical. Although financing via electronic checks has been maintained, rates have risen from 35% to 50%. In a context of flat sales, margins are shrinking, and fears of layoffs to maintain profitability are growing.

The latest indicators show a slowdown in the economy. The National Institute of Statistics and Census (INDEC) reported that the EMAE fell 0.7% in June and revised the May figure downward (-0.2%) . In short, activity peaked in the first quarter and has since plateaued.

In July, the industry fell 3.3% year-on-year according to FIEL, which reduced the accumulated improvement for the year to just 1.7%. The risk of the "V"-shaped recovery turning into a "W" worries almost all productive sectors.

Milei insists that, after the elections, rates will return to normal. But the market is wary. The lack of a solid majority in Congress and recent legislative defeats raise alarms. The opposition managed to override a presidential veto and advance laws that increase spending without defining where the funds will come from.

The fiscal surplus, one of the program's pillars, remains under pressure. Although the government celebrated avoiding the cost of the pension increase (1.2% of GDP), it still faces the uncertainty of what will happen with the disability emergency, the Garrahan Institute, and universities.

Added to all this is the scandal over alleged bribes in the purchase of medicines, which involves officials and businessmen in the sector. With less than two weeks until the Buenos Aires elections, the case poses an additional risk of political erosion.

Too many open fronts for a government seeking to sustain investor confidence and prevent uncertainty from turning into recession.