Javier Milei had warned: he would “
cut
” public spending and gradually establish a free market economy.
Curiously nicknamed the “
Trump of the Pampas
”, he was widely elected on November 19 with a clear slogan: “
Viva la libertad carajo” (Long live freedom, damn it!).
The Argentine president faces a general strike this Wednesday at the call of the ... CGT, the country's main union, which deeply regrets his liberal measures.
Upon his inauguration, the new president applied his first measure: the devaluation of the peso, which went from 400 to 800 dollars for 1 peso.
However, 40% of Argentinians already live below the poverty line, and inflation has increased by 200% in one year.
But Argentina has experienced “
a series of crises over the last hundred years which all have the same origin: the budget deficit
”, defends Javier Milei in his inauguration speech.
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To do this, the Argentine government announced the reduction, from January, of transport and energy subsidies.
Javier Milei also judges that they artificially increase the price for the consumer.
“
The State artificially supports very low prices via these subsidies, to make people believe that they have money, but (...) it is not free and people pay for it in inflation
,” he said. justified Luis Caputo, Minister of Economy.
“
Decree of necessity and emergency
”
On December 20, Javier Milei announced a “
mega decree
” which included 366 articles summarized in 30 key points to free many sectors of the economy from the weight of the State.
He titled it “
Decree of Necessity and Emergency
” (DNU).
“
The objective is to begin the path towards the reconstruction of the country, to restore freedom and autonomy to individuals,”
he explained, “
and to begin to disarm the enormous amount of regulations that have held back, hindered and prevented economic growth in our country.
Among these measures is the repeal of the law governing rents,
“so that the real estate market begins to function without problems again”.
According to the Argentine Real Estate Chamber, prices fell, one month after the measure was applied, by 20% and the number of available housing units doubled.
Javier Milei also repealed laws prohibiting, or preventing, the liberalization of public companies.
Aerolineas Argentinas, the airline nationalized in 2008, and the oil group YPF are particularly targeted.
Several sectors have been deregulated: tourism, health, Internet, pharmacies, viticulture and commerce.
Finally, the Argentine government announced a “
modernization of labor law, to facilitate the process of authentic job creation.”
The trial period is now 3 to 8 months, compensation in the event of dismissal has also been reduced.
Certain provisions were challenged by the courts, which must examine them further.
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Finally, 9 ministries out of 18 are eliminated, the secretariats and general directorates are reduced from 106 to 54. A “
reduction of 34% of political positions in the State
”, explained Luis Caputo.
State advertisements are removed, and public projects that have not started will not be launched.
“
Infrastructure projects in Argentina will be carried out by the private sector, because the State has neither money nor financing to carry them out
,” the minister stressed.
However, the government will, however, “
strengthen social policies received directly by those who need them most, without intermediaries
,” he added.
According to the government, inflation cannot, in fact, be brought under control before “
18 to 24 months
”.
“
For a few months, it's going to be worse than before, especially regarding inflation.
As the president says, an inconvenient truth is better than a comfortable lie
,” added Luis Caputo.
With its first measures, the government estimates that it will be able to save an envelope of nearly 5% of GDP.
The “Omnibus” bill
A week after this “
mega decree
”, Javier Milei presented a “
mega bill
”, of 183 pages and 664 articles.
It is nicknamed "
omnibus law
" for the variety of subjects it includes: calculation of pensions, length of the working day, simplification of the divorce procedure... With this law, the Argentine president declares "
the state of “emergency in economic, financial, tax, security, defense, tariff, energy, health, administrative and social matters until December 31, 2025.
”
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This bill, if passed, provides that the executive can assume prerogatives from Parliament in several areas (economy, taxes, finances, security, etc.)
via “public emergency
”.
It simplifies the electoral calendar, eliminates party primaries deemed too costly for the taxpayer, and restructures Parliament.
The latter was convened in extraordinary session until January 31 to examine the bill.
Its adoption is not guaranteed, Javier Milei's party “
La Libertad Avanza
” being only the third force with 38 deputies out of 257.
This succession of reforms is contested by part of the political class, as demonstrated by the demonstrations of December 22 and 27.
However, it is very well received by world economic authorities, as evidenced by the invitation from the Argentine president to Davos.
“
Do not let yourself be intimidated by the political caste or by the parasites who live off the State.
Do not submit to a political class that only seeks to perpetuate itself in power and maintain its privileges
,” he told his audience on January 17.
In addition, the IMF welcomed "
the considerable efforts made by the new authorities to restore macroeconomic stability and help Argentina meet its balance of payments needs
", on January 11 and proposed to pay aid 4.7 billion of dollars.
This Wednesday's demonstration sounds like a show of force against the executive.
But Javier Milei has more than one trick up his sleeve: he charges the unions for the security costs of demonstrations.
Several unions have already received a fine of 56 million pesos ($66,000) for the demonstrations of December 22 and 27.