The economic deregulation program of the ultraliberal Argentine President Javier Milei received the final green light from Parliament on Friday with the approval of deputies, after months of debate on a deeply revised text.
Mr. Milei, elected in November, marks his first parliamentary victory since his inauguration on December 10 and the president’s office “welcomed” the vote on the social network X.
“The national government has obtained the approval of the first law since the Argentines voted for a free and prosperous country,” according to the presidency.
The bill was approved by 148 votes to 107 this amended reform package, already adopted in the Senate on June 13 after a day marked by clashes. The vote of the deputies, who rejected the project in February, was not marked by such incidents.
“We will give President Milei’s government the tools it needs to reform the state once and for all,” said the leader of the ruling bloc, Gabriel Bornoroni.
Excessive, with 664 articles in its initial version, the package of deregulatory or austerity reforms had been presented in December by Mr. Milei.
The bill has been dubbed “omnibus” because of its all-encompassing nature, ranging from the electoral system to privatizations, from pensions to the penal code, from education to culture and divorce.
As parliamentary negotiations progressed, it was unravelled and reduced to 238 articles, with reservations on the privatisation of public companies – eleven planned instead of around forty initially – or the flexibility of labour law, in a lightened version.
– “With nothing in exchange” –
Javier Milei’s libertarian party, Libertad Avanza, is in the minority in Parliament – only seven seats out of 72 in the Senate and third largest in the House with 38 deputies.
Peronist MP Hugo Yasky denounced the new law as “a tailor-made suit” for the government. According to him, it opens the way to foreign capital in the oil and lithium sectors “for nothing in return” and will transform the country “into a tax haven”.
Politically, the green light means “a total success for the government,” political scientist and economist Pablo Tigani told AFP.
But in the economic field, “it will be a return to the policies of the 1990s with deregulation, privatization and unconditional opening of the economy which will deal a hard blow to industry and to small and medium-sized national enterprises,” he said.
“Laws do not mean much when the economic and social situation is explosive,” added Mr. Tigani. “I expect problems of governability and a president hampered by the social situation.”
Even before the adoption of the project, Mr. Milei was pleased to have achieved “the largest tax adjustment not only in the history of Argentina, but also in the history of humanity.”
His government immediately applied a drastic program of all-out budgetary austerity, with the objective of “zero budget deficit” by the end of 2024, and thus to tame chronic inflation (211% in 2023).
– Recession and poverty –
But budget cuts, including the paralysis of public works, coupled with a brutal devaluation (54%) of the peso in December, have strangled purchasing power. An impact that is reflected in consumption, activity and employment.
Inflation in Argentina continued in May the gradual deceleration that began five months ago, to 4.2% over one month, the lowest in two and a half years, but remains crushing, at 276.4% over one year.
Consumption and activity are plummeting. The recession is setting in, with a contraction in gross domestic product (GDP) of 5.1% in the first quarter year-on-year. Poverty now affects more than half of the population (55.5% in the first quarter of 2024 compared to 44.7% a year earlier), according to the Social Debt Observatory of the Catholic University (ODSA-UCA).
And on the political side, the president will have to face new challenges “because the opposition ready for dialogue will adopt a new attitude (…) forcing Milei to give priority to management,” believes analyst Carlos Germano, of Germano y Asociados.
