The measure could affect the strict fiscal balance promoted by the Government

Argentina's opposition-controlled Congress on Thursday dealt a fresh blow to ultra-liberal President Javier Milei by approving a pension hike that could undermine the government's strict fiscal balance.

With 61 votes in favor and 8 against, the Senate passed into law a bill that restructures pensions - punished by high inflation this year - and establishes a new adjustment mechanism.

Although Milei anticipated that she could veto the law, the broad consensus she achieved among Peronism, centrist parties and even the center-right allied to the government will make it difficult to do so without generating widespread social unrest.

Amid inflation that has declined but is still approaching 200% annually and a fierce cut in public spending, poverty has grown to affect half of Argentines.

"55.5% of Argentines live in poverty and 17.5% in extreme poverty. Many of them are elderly," said Senator Juliana Di Tullio, of the centre-left Peronist party, justifying the pension cuts.

The pension increase came after Congress this week rejected a presidential decree that would increase the budget of the local intelligence service, which lawmakers argued could be used to address more urgent social needs.