FILE PHOTO: Argentina's President Javier Milei gestures during a ceremony marking the 171st Anniversary of the Buenos Aires Stock Exchange, in Buenos Aires, Argentina, July 10, 2025. REUTERS/Mariana Nedelcu/File Photo

BUENOS AIRES (Reuters) -Argentine President Javier Milei's government suffered a legislative setback late Thursday after the Senate rejected a series of presidential decrees and approved budget increases for public universities.

Milei, a libertarian, has aimed to tame runaway inflation with strict austerity and by blocking any laws that the opposition-controlled Congress could pass that would affect the country's finances.

Senators approved funding for national universities, including an increase in their employees' salaries. They also debated an increase in the health budget through the declaration of a pediatric emergency for two years.

"Argentina's public university is part of our national identity, and defending it is a decision for the future," said Senator Alejandra Vigo, of the opposition Peronist alliance.

Milei said he will veto laws that involve an increase in budget allocations.

The upper house also rejected five presidential decrees that sought to reduce the state structure, a setback to Milei's flagship fiscal adjustment that he has pushed since taking office in December 2023.

The president's libertarian government, which has a minority in both the Senate and the lower house Chamber of Deputies, hit another legislative stumbling block on Wednesday when opposition representatives secured the necessary votes to overrule a veto Milei put on an increase in subsidies for the disabled.

"We face a Congress hijacked by Kirchnerism (Peronism), a Congress that only responds to its own interests," Milei had said earlier in an event with business leaders.

"They reminded us that they have only one legislative agenda, which is to bankrupt the national state," he added.

(Reporting by Eliana Raszewski, writing by Cassandra Garrison; Editing by Hugh Lawson)