President Milei’s Plan and Proposed Reform Package for Argentina
Argentina has been continually plagued by a never-ending economic crisis, currently facing an annual inflation rate of 200% and poverty levels soaring to 40%. Winning the election in November 2023, Argentina adopted Javier Milei as their president, hoping his plans for office would help redirect the country’s economy. Milei brought about a new hope to Argentina, as his role as an economist was believed to help reform the disaster of Argentina’s economy. President Milei, since beginning his term, has caused controversy among the population, as his first action a part of his “shock therapy” to Argentina’s economy was devaluing the peso by 50%. While the people held hope in Milei, he fell short of their expectations with the imposed cut to transport and energy subsidies. Along with this cut to subsidies, Milei made it clear he will not be renewing contracts for thousands of state employees. This reduction of contracts has reduced government ministries, including Health, Education, Labor, and Social Development, down to almost half the concentration of workers as before Milei took office. Milei has also introduced a team of economists into Argentina’s government scene, appointing people like Diana Mondino, a previous professor of economics, and Elenora Urrutia.
One of Milei’s “non-negotiable” goals, stated as he began his presidency, is the closure of the Central Bank. The Central Bank of Argentina, a 86 year old institution, was left by former president Alberto Fernández with negative net reserves of $12 billion. Closure of the Central Bank is proposed with a disregard of the currency, a process called dollarization. Dollarization could reduce inflation dramatically, however Argentina would be adopting the U.S. dollar which would mean also adopting the US inflation rate. This closure of the Central Bank offers the possibility of positively shifting the economy, however Milei lacks a majority in Congress, providing a major obstacle in these reforms. Milei also preached that he would reduce state spending, achieve fiscal balance, and stop printing money to subsidize government expenditures. So far, Milei’s presidency has consisted of the expansion of export taxes and reinstating of income taxes, along with the introduction of a new reform package. Milei has also reached an agreement with the International Monetary Fund (IMF), following previous loans of $44 billion that Argentina has been unable to pay back. IMF and Milei negotiations finalized an agreement of $4.7 billion and a strengthened set of policies aimed to reset macroeconomic stability of the country.
President Milei has also introduced a new reform package consisting of over 650 articles, with the aim of shifting the economic scene. This package, containing the “Omnibus” bill, touches a multitude of fundamental issues that govern Argentine people. This reform package touches on all areas of life ranging from the penal code and divorce to restrictions on protests and the deregulation of environment, healthcare, and labor laws, proposing changes to over 300 laws. The reform package aims to usher in free market reforms and includes proposals for an overhaul of the tax system and change to the way pensions are calculated. One of the most controversial provisions included in this reform package would grant President Milei special emergency powers, which would enable him to make decisions without first consulting Congress on a number of topics, including economics and security.
The “Omnibus” bill was approved by lower-level legislation with a 144 vs. 109 vote as of February 3, 2024, although critics argue the government will rely on the bill to increase exploitation of natural resources, benefit the private sector and restrict resources for environmental purposes. The mammoth bill is another key part of this reform package, which covers economic polys to privatization of state entities. Following the reform package being brought to Congress, it has been negotiated down to a reduced 382 articles, despite Milei’s dismay. The package has been divided down to article per article, for further review by legislation.
This reform package has faced push back from Argentine citizens, as they take to protesting outside of Congress. Over 20 people have been detained and 150 people injured by riot law enforcement attempting to disperse the crowds. The protestors outside Congress turned to chanting “the nation is not for sale”, emphasizing the people’s dismay with the new president’s actions for their country. Many claim that Milei’s reforms will bring the country into a worse state, both socially and economically, and that the poor and working class are suffering under Milei’s presidency. Larger strikes and riots have begun to take place, disrupting public transportation, flights, and other services in cities. The last attempt to stabilize the economy in 2001 also resulted in mass protests and riots, revealing that the reversal of economic struggle in Argentina has been and will be anything but seamless. Milei’s claim to drag the country out of economic crisis has yet to be fulfilled, as many believe the proposed reforms a part of the reform package will only harm the working class and increase poverty. In addition to the public revolts in the face of Milei’s reforms, 60 lawsuits have already been filed challenging his reforms. Included in the reform package are attempts to increase job probation periods from three to eight months, cut pregnancy leave and reduce compensation following dismissal from a job.
These lawsuits and public displays of unhappiness with Milei’s proposed reforms reflect Argentina’s opinion in relation to this new presidency and the obvious disappointment towards Milei’s attempt to reverse the economic scene. Although Milei was only inaugurated in December 2023, his intention to reduce inflation and poverty in Argentina has yet to be fulfilled. Only time will tell whether this economist of a president will succeed in saving Argentina’s economy and its people.
Image courtesy of President of the Republic of Armenia via Wikimedia, ©2023. Some rights reserved.
The views and opinions expressed in this article are those of the author and do not necessarily reflect those of the wider St. Andrews Foreign Affairs Review team.
