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Milei’s reform proposal for Argentina is ready to clear the final hurdle: Congress is voting on the “Ley de Bases” bill – with consequences for the country.
Buenos Aires – The reform proposals of Argentine President Javier Milei will be presented to Congress for a final vote this week. The risk of failure is low.
These are radical reforms. The extensive “Ley de Bases” bill includes, among other things, that Congress will disempower itself for one year due to a declared state of emergency, thus giving Milei extensive additional decision-making powers that bypass parliament.
Milei wants more privatization in Argentina
The plans of the self-proclaimed “anarcho-capitalists” also include the privatization of state institutions and the promotion of private investment. It has already been broadly adopted in both houses of Congress, together with a separate budget package.
However, senators amended both bills in a narrow vote to approve the reforms earlier this month – after the House of Commons passed the bill in April. On Thursday, the bill will be sent back to the House of Commons to sign off on the changes.
The lower house must now decide whether to accept the version passed by the Senate, which removes the state airline, the post office and broadcasting from the list of possible privatizations, restricts incentives for new investments and removes adjustments to the taxation of high salaries and private wealth.
Government sources said it was “possible or likely” that the three state-owned companies would be removed from the privatization list to avoid a legal conflict with the opposition. The changes to the investment regime made by the Senate would also be accepted.
Argentina is in a serious economic crisis
The bill, Milei’s first major legislative initiative since taking office in December, was cut from the original 600 articles to around 238. Nevertheless, it represents a clear change of course towards a free-market economy for Argentina after years of a strong state, job protection and high government spending.
It is an important indicator of Milei’s ability to govern and is central to his plans to rehabilitate the country’s ailing economy. Argentina is in recession. The country has been plagued for years by budget deficits that have driven it into debt that it can hardly repay. In addition, Argentina suffers from a bloated state apparatus, low industrial productivity and a large shadow economy that deprives the state of a lot of tax revenue.
The ultra-liberal president wants to get the once rich country back on track with a radical austerity program. cut thousands of public sector jobscut subsidies and wound up social programs. But that comes at a price: the tough measures are choking economic output. The International Monetary Fund (IMF) is expecting a decline of 2.8 percent this year. According to the Catholic University of Argentina, almost 56 percent of people in Argentina live below the poverty line and around 18 percent live in extreme poverty.
Centre-right supports Milei – left-wing opposition splinters
Milei’s party, La Libertad Avanza, has only a small minority in both houses of Congress, but he has formed close allies with the main center-right bloc and has filled his cabinet with more conservative representatives of the established center, among others, which helps him win support in parliament.
The left-wing Peronist opposition, the country’s dominant political force for decades, will oppose the law, but they are fragmented and do not have enough power to block it. They may, however, try to delay the laws’ implementation through legal means.
However, analysts believe that the opposition cannot do much to torpedo the law at this point.
“What will definitely not happen is that the law will not be approved,” said analyst Shila Vilker from the Trespuntozero polling institute. “It’s about the final version of the articles, nothing else.” (sot with dpa/rtr)
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