Argentina’s Milei calls bribery scandal a political operation

Argentina’s Milei calls bribery scandal a political operation

Argentina’s President Javier Milei has dismissed allegations of bribery involving his sister, Karina Milei, and former disability agency head Diego Spagnuolo, labeling the scandal a political operation aimed at undermining his administration. The allegations, which surfaced in recent weeks, have sparked market turmoil and increased political pressure ahead of the country’s October midterm elections.

The scandal began when local media published audio recordings in which Spagnuolo could be heard discussing bribery within the disability agency. The recordings suggest that Karina Milei, who holds a high-level position in Milei’s government, received illicit payments from government contracts intended to help those with disabilities. Spagnuolo was dismissed from his post following the revelations, but the authenticity of the audio has not been verified.

Milei has refused to comment directly on the scandal, instead characterizing the reports as political attacks by opposition groups. He has taken to social media to campaign against what he refers to as “Kirchnerism,” a left-wing political movement. The president has also used the incident to bolster his campaign for the upcoming elections, framing it as a choice between civilization and barbarity.

The scandal has had significant financial implications for Argentina. Market volatility has increased, with stocks, bonds, and the peso all experiencing sharp declines. The country’s closely-watched country risk index, which reflects how investors view Argentina’s debt, hit its highest level since mid-April. The peso has lost 5.02% against the dollar over the past four weeks, while the Merval index, the country’s stock market benchmark, slid 4% following a 3.8% decline the previous week.

In response to the market turmoil, Argentina’s central bank has raised its reserve requirements for banks to a level that could risk slowing the economy. The 3.5% increase, the third in recent weeks, is set to come into force on September 1. The move is intended to soothe markets and calm investor nervousness, but analysts warn that the level is fast approaching an unusual 50% which could slow hoped-for recovery in economic growth.

The economic challenges faced by Argentina under Milei’s administration have been significant. His austerity campaign has included cuts to social safety-net services, widespread government layoffs, and sweeping deregulation. While official statistics indicate that inflation has dropped, unemployment and poverty have risen.

The upcoming elections are seen as a major test for Milei as he reaches the midpoint of his four-year term as president. The elections will see half of the 257-seat Chamber of Deputies up for grabs, as well as a third of the Senate. The elections are expected to reconfigure both Argentina’s Congress and Senate on October 26.

The scandal has highlighted the political and financial pressures facing Argentina and its president. As the country prepares for the elections, the impact of the bribery allegations on the political landscape and the economy remains to be seen.

References:
[1] https://www.reuters.com/sustainability/boards-policy-regulation/argentina-central-bank-raises-banks-reserve-requirements-after-corruption-2025-08-26/
[2] https://www.aljazeera.com/news/2025/8/28/argentinian-president-javier-milei-leaves-rally-after-protesters-throw-rocks
[3] https://www.cryptopolitan.com/mileis-economic-argentina-undone/