ANDArgentine President Javier Milei achieved his first legislative victory after six months of government on Thursday with the approval of the Bases Law, which he calls the “most ambitious reform of the last 40 years” in the Senate.
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Nevertheless, The libertarian president has under his shoulders the urgent need to obtain economic achievements that alleviate the pressure of an impatient society in need of solutions.
For now, the Argentine president seems to put the chips in his favor.
“Milei gives a sign that Argentina can be governed even from a very marked minority in Congress by having only 10 percent of the seats. With the legislative victory, the president was able to demonstrate the viability of his political project and this had an impact on the confidence of private companies and the market.“, Argentine analyst Juan Negri explains to this newspaper.
Precisely, the financial markets reacted positively this Thursday to the approval of the law, considering it as a sign of governability and sustainability of the libertarian president’s economic program.
Presidential spokesman Manuel Adorni assured that shares on Wall Street were rising 8 percent, sovereign bonds recovered 4 percent of their value and the country risk is declining (1,393 basis points).
Javier Milei’s bittersweet triumph with the Bases Law, what was left out?
The approval of the ambitious legislative project and a fiscal package that increases tax revenues was generally approvedbut in the particular vote on the articles of the fiscal package, the senators rejected the modification to the personal property tax and the restitution of the income tax on salaries.
With the legislative victory, the president was able to demonstrate the viability of his political project and this had an impact on the confidence of private companies and the market.
“Beyond the independence that the economic team proposes between this point and the fiscal goal, it is still a blow that will have to be compensated in another way to maintain fiscal discipline,” indicated a report from the fund manager Portfolio Personal Inversiones. (PPI).
Added to this is that the Bases Law will return to the Lower House, which can still vote on the project with the modifications proposed by the Senate or the Government can insist on the original text that was intended to be composed of some 600 articles against the more than 200 of the current. However, for Negri, “The adjusted version has a better chance of being approved by the Senate than the original.”
People hold flags outside the Argentine Senate.
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“In terms of content, this is a law very far from the megadecree that Milei established at the beginning of his mandate. The government made concessions that limit it in relation to its original proposal to diametrically reduce the State. He was also unable to impose his interests in other areas such as income tax, although greater power could be concentrated in his person,” explains MatĂas Franchini, an academic at the Universidad del Rosario.
The negotiated and reduced reform includes privatizations of public companies, tax modifications, economic deregulations, the delegation of special powers to the Executive and a special regime for large investments.
The law declares a public emergency for one year in administrative, economic, financial and energy matters so, during that special period, the Argentine Executive will have legislative powers in those key areas, that is, it will be able to reform or approve laws without going through the Congress. The Legislative Branch finally grants this tool to Milei, although for half the time he wanted and for a third of the subjects requested in the original December project.
Regarding the privatization of companies, legislators have decided that the majority of public companies are not for sale. AerolĂneas Argentinas, Correo and the public media of Radio and Television Argentina (RTA) are among the seven that will remain public.
The government made concessions that limit it in relation to its original proposal to diametrically reduce the State.
The Executive will be able to close all public organizations except for twenty, which can only be restructured. In addition, he is looking closely at obtaining a labor reform that several of his predecessors, such as Mauricio Macri, tried without success and that, although it is inferior to what he was looking for, will allow him to extend the trial period and make the dismissal compensation regime more flexible. .
“It is the most important moment since Milei has been president,” political analyst Gustavo CĂłrdoba told AFP.
“Milei found a virtuous circle of power construction that gave him a result and shows that the veroborrhagic president, who has insulted Congress and its members by calling them a “rat’s nest” or responded to their decisions by saying that he doesn’t give a damn, begins to “delegate negotiation to political specialists,” added the analyst.
The debate on the law was framed by riots in front of Congress that left around twenty people injured – including five congressmen – and detained, in addition to cars set on fire.
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Heterogeneous opposition and context of recession, among the reasons that gave the yes to Ley Bases in the Argentine Senate
On the other hand, the opposition is not consolidated and is rather heterogeneous. Although the Peronist bloc, with strong representation in both chambers, has been reluctant to approve the initiatives of the new Government, two loose chips that did not act as a bloc have allowed the Government to maneuver.
“Peronism, especially Christianity, was basically contrary to the Bases Law and failed in its mobilization to overthrow it.. The opposition was not up to the task of building power that the Government made and attended the session in an improvised manner,” remarked Franchini.
For analysts, the Senate vote took place in a context of recession in which industrial activity and consumption have plummeted, half of the population is in poverty, thousands have been laid off and salaries and pensions have lost purchasing power in the face of a high price index.
The government can show achievements on that front: inflation continued to moderate in May, to 4.2 percent monthly, the lowest in two and a half years, But in 12 months it continues to be close to 280 percent and the opposition insists that these results are due to the spectacular price increase that Milei carried out at the beginning of his Government.
In the fiscal section, the deficit in public accounts is also being contained. In fact, the International Monetary Fund approved the eighth review of the credit agreement and, therefore, the immediate disbursement of some 800 million dollars. Of course, with a call to “improve the quality of fiscal adjustment.”
Javier Milei.
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Half of Argentines in poverty do not give Javier Milei any more waiting time
Even so, society is impatient. The debate on the law was framed by riots in front of Congress that left around twenty people injured – including five congressmen – and detained, in addition to cars set on fire.
And, as Milei insisted on repeated occasions that the Base Law is key to the country’s economic takeoff, with its approval, the discursive tool lost ground.
“People are going to say: ‘well, you already have the necessary tools’, then the time it takes to show results is going to be billed against them,” says CĂłrdoba.
According to several surveys, Milei still retains close to 50 percent support among the population. Not a minor fact, his predecessor Alberto Fernández did not reach 36 percent in the same period of Government, so he must capitalize on it with facts.
For political scientist Iván Schuliaquer, “what many people still associate with Milei is hope, the possibility of a future where that promise is fulfilled that after the adjustment there will be growth that many actors question.”
Thus, the Government now has little time to produce economic changes, especially through the controversial Large Investment Incentive (RIGI), included in the Bases Law, which offers tax, customs and exchange advantages for 30 years to larger foreign capital. to 200 million dollars.
However, the results of this measure will not be immediate, experts warn, while critics accuse the government of trying to give a blank check to foreign capital and the demonstrations remain latent.
“Protest is part of the Argentine political landscape and I believe that, as Milei continues with his reformist agenda, he will encounter opposition from various sectors that will surely mobilize. Although everything will depend on the economic situation, if it improves visibly, we will surely see much less discontent in the streets,” stated Negri.
STEPHANY ECHAVARRĂŤA – International Editor – EL TIEMPO
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