In a significant victory for libertarian President Javier Milei, Argentina's Senate has approved his key reform bill and a twin fiscal package, albeit with significant watering down to garner support. The approvals came late on Wednesday and early Thursday, showcasing Milei's ability to win over conservative and centrist allies, despite his party's minority seats in Congress.

The Senate's approval of Milei's "Bases" law by a narrow margin is a boost for his austerity and pro-market program, which has already improved state finances and spurred market confidence. However, the bill's impact on the wider economy has been contentious. Additionally, the Senate also approved a separate fiscal package, albeit with exclusions related to taxes and property.

While the bills will be sent back to the lower house for ratification, the Senate's backing holds great significance for Milei's administration. It also comes amidst fiery protests against the bill outside the legislature, underscoring the contentious nature of the reforms.

The Senate's approval brought relief to international investors, reflected in the positive performance of Argentina's international dollar bonds. The sprawling bill includes articles on privatizations and investment incentives, which had raised concerns but were not rejected. The government had to negotiate extensively, incorporating changes to investment incentive plans and removing state entities like the national airline and postal service from the list of firms to be privatized.

Experts have commented on the significance of the Senate's support, with economic scientist Juan Massot highlighting how it strengthens the government and eases investor anxiety. However, Ernesto Revilla, Latin America economist at Citi, views it as a bittersweet victory for Milei, given the continuous dilution of the bill throughout the process.

Meanwhile, the approval has evoked mixed feelings among the Argentine populace. The country is grappling with triple-digit inflation, high debt loads, capital controls, and depleted central bank reserves. Milei's focus on stabilizing the state's finances has helped address the fiscal deficit but has exerted pressure on economic activity and jobs.

While some citizens express concern over the consequences of the approved reforms, others are optimistic about the proposed radical change and the potential for favorable outcomes.

Looking ahead, the Senate's support could mark a breakthrough if ratified in the lower house. However, ratings agency S&P Global suggests that there is still work to be done before any ratings upgrade, citing the need for further adjustments in navigating the challenging economic climate.

As Argentina braces for further adjustments, the success of Milei's administration will depend on the government's ability to implement reforms swiftly and effectively while mitigating the impact on citizens during these challenging times.