(Bloomberg) -- President Javier Milei took a major step in his economic overhaul of Argentina, winning just enough support to advance his proposals in the Senate even as protests raged in the capital.

After weeks of tense negotiations, senators passed Milei’s market-friendly bill that included privatizations and labor law changes when his vice president broke a 36-36 tie late Wednesday. While a measure to bring back an income tax was rejected in a separate procedure, it stands a chance of being restored in the lower house.

Investors reacted positively Thursday morning. Argentina’s sovereign dollar bonds were the best performers in emerging markets with notes due 2029, 2030, 2035 and 2046 climbing at least 2 cents on the dollar, according to pricing data compiled by Bloomberg.

Both the so-called omnibus bill — which Milei’s supporters made changes to late on Wednesday to help smooth passage — and the rejected fiscal measures will go back to the lower house. The government holds a stronger hand there and could still salvage its tax proposals. 

Underscoring the political resistance to Milei’s plans, protesters threw rocks, broken glass and Molotov cocktails Wednesday afternoon at riot police attempting to clear a nearby plaza with a water cannon and tear gas. Protesters also flipped and burned a car.

Yet the economic changes approved in the first bill mark Milei’s biggest legislative achievement. While the legislation has gone through significant revisions, it contains measures designed to make the country more attractive to employers and business interests. And its advancement proves Milei can legislate despite a hostile relationship with members of Congress he continues to vilify.

“This is a positive development for investors, who are still on a wait-and-see mode with Argentina,” Marcelo García, Latin America director at political risk consultancy Horizon Engage, said by email before the final voting ended. “The tight outcome of this vote in the Senate means the Milei government will need to continue to grow its incipient negotiations skills.”

Outside the debate on Wednesday, dozens of people were detained and at least nine were hospitalized, including multiple members of the lower house of Congress, according to local media. Pot-banging demonstrations were heard throughout the capital as darkness fell.

Milei’s party modified the economic reform bill earlier on Wednesday to heighten its chances by removing state-run airline company Aerolineas Argentinas, among others, from the list of firms eligible for privatization. The controversial bid previously put at risk his entire privatization chapter, which also includes energy and freight firms. 

Focus now turns to negotiations on the modifications in the lower house. “The final technical stage could still bring surprises,” said Mariano Machado, principal Americas analyst at risk intelligence company Verisk Maplecroft.

Milei’s party holds just 7 of 72 seats in the upper chamber. Meanwhile, the Peronists have 33 senators. The government holds 15% of seats in the lower house and counts on more allies there, including former President Mauricio Macri’s market-friendly bloc. 

The tax measure squeaked through in a 132-113 vote the first time around, so securing its passage remains the biggest challenge.

Though incomplete, the Senate win helps validate Milei’s decision to tap Guillermo Francos, a career politician, as his new cabinet chief to negotiate lawmaker support and concessions in the final days leading up to the vote. The president’s dismissal of Nicolas Posse as cabinet chief marked the highest-level departure from the government since it took office Dec. 10. 

In a sign of thawing tensions, the government handed hundreds of previously halted public works projects over to the provinces so they could restart them, although funding assurances are less clear. 

A pact with Argentina’s provincial governors that Milei initially hoped would be signed in May is now expected to be finalized on July 9, Francos told a local radio station Thursday morning.

In a statement late Wednesday, Milei celebrated the first bill’s initial approval. “It’s a triumph for the Argentine people and a first step toward the recovery toward our grandness, having approved the most ambitious legislative reform in the past 40 years,” Milei’s office said. 

The president left Argentina on another international tour Wednesday night to join Group of Seven leaders in Italy this week, a trip he initially canceled and later reconfirmed. He’ll return to home next week before flying out again to receive awards from libertarian organizations in Spain and Germany.

On Friday, he’ll meet with the International Monetary Fund’s managing director on the sidelines of the G-7 summit. Milei’s team is gearing up for negotiations with the Washington-based lender as it seeks fresh funds in a new program so it can eventually lift capital controls.

Milei will also travel to China soon for talks with President Xi Jinping, according to a Clarin newspaper report. Argentina’s central bank announced Wednesday that it has renewed a roughly $5 billion portion of its currency swap line with the People’s Bank of China for another two years.

(Updates with government reaction and next steps.)

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